Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, the firm provides service to
A) 3.5 million households.
B) 6 million households.
C) 10.5 million households.
D) 12.5 million households.
C
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Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics?
a. college tuition rates b. farm subsidies c. national income d. automobile prices e. air traffic congestion f. economic recession
Why doesn’t a perfectly competitive firm charge a price slightly higher than the industry price in order to earn extra profit?
What will be an ideal response?
An economy that is currently producing a gross domestic product worth $200 million but is capable of producing an output worth $180 million at full-employment equilibrium would have a(n):
a. recessionary gap of $50 million. b. expansionary gap of $20 million. c. recessionary gap of $30 million. d. expansionary gap of $40 million.
Consumer surplus
a. is closely related to the supply curve for a product. b. is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line. c. is measured using the demand curve for a product. d. does not reflect economic well-being in most markets.