In practice, regulatory boards try to set the price of a natural monopoly so that price covers a normal return on capital investment. As a result:
A. there is an incentive to use more equipment.
B. the price of equipment should decrease.
C. there is an incentive to use less equipment.
D. the incentive to use equipment stays the same.
Answer: A
You might also like to view...
From 1980 to 2000 the employment-to-population ratio generally ________ and from 2000 to 2014 the ratio generally ________
A) increased; decreased B) decreased; decreased C) increased; increased D) decreased; increased
In the above table, which tax plan is proportional?
A) only plan A B) only plan B C) only plan C D) both plan A and plan C
In Singapore the government places a $5,000 tax on the buyers of new automobiles. After the purchase of a new car, a buyer must pay the government $5,000. How would the imposition of the tax on buyers be illustrated in a graph?
A) The tax will shift the demand curve to the left by $5,000. B) The tax will shift the supply curve to the left by $5,000. C) The tax will shift both the demand and supply curves to the right by $5,000. D) The tax will shift the demand curve to the right by $5,000.
Costume jewelry is produced in a monopolistically competitive market. One producer produces 700 necklaces and at that output level, MR = MC = $3 . We know then that
a. the price is $3 b. economic profit is $2,100 c. the price is higher than $3 d. new firms will enter the market e. the firms should produce the 700 necklaces in the short run, but shut down in the long run