What is the problem with marginal cost pricing in the natural monopoly situation? How do regulatory agencies in the United States usually handle the problem?
What will be an ideal response?
If the firm is a natural monopoly, then long-run average costs are downward sloping over the entire range of demand, which implies marginal cost lies below average cost. If price equals marginal cost, price will be below average cost and the firm will earn economic losses. In the long run, it will go out of business, so marginal cost pricing is not feasible. Most regulatory agencies strive for average cost pricing so that the owners receive a normal rate of return on investment.
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Which of the following is a checkable deposit?
A) a NOW account B) a money market deposit account C) a certificate of deposit D) a savings account
If a person is entertained by gambling, then
A) she is not risk averse. B) she does not understand the concept of a fair game. C) she may gamble even if it is an unfair game. D) she will definitely not buy automobile insurance.
For a competitive market,
a. a seller can always increase her profit by raising the price of her product. b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. a seller often charges less than the going price to increase sales and profit. d. a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time.
Which statement is true?
A. There is no evidence whatsoever to support the contention that women, blacks, Hispanics, and other minorities are victims of employment discrimination. B. The relatively lower wages earned by women and minorities can be explained entirely by employment discrimination. C. The poverty of women, blacks, and Hispanics can be explained almost entirely by their low earnings. D. None of these statements are true.