One argument for having the government regulate natural monopolies is that without regulation ________.
A. the industry would become perfectly competitive and there would be too many firms in the market to achieve efficiency
B. these monopolies produce at a level where price is greater than marginal cost
C. these monopolies produce at a level where price is less than marginal cost
D. these monopolies usually produce things that are potentially harmful to our health
Answer: B
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Suppose a monopolist can charge different prices to different customers, such as doctors charging different prices depending on whether the patient is insured. How will profits and marginal revenue of such a price-discriminating monopolist compare to profits and MR of an ordinary monopolist who must charge all patients the same fee?
If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. neither the short-run nor long-run aggregate supply curves would be affected. B. only the long-run aggregate supply curve would shift left. C. only the short-run aggregate supply curve would shift left. D. the long-run and short-run aggregate supply curves would both shift left.
Holding other factors constant, if a tax increase moves the government budget from deficit to surplus, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A. increase; not change B. decrease; decrease C. decrease; increase D. increase; increase
Suppose a new contracting environment that requires clearing fewer legal hurdles is considered. This new contract will result in:
A. an increase in the marginal cost and a shorter optimal contract. B. a decrease in the marginal cost and a shorter optimal contract. C. a decrease in the marginal cost and a longer optimal contract. D. an increase in the marginal cost and a longer optimal contract.