If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output, then:
A. the firm will realize an economic profit.
B. the firm will earn only a normal profit.
C. allocative efficiency will be worsened.
D. the firm must be subsidized or it will go bankrupt.
Answer: D
You might also like to view...
The slope of the production possibility frontier shows
a. how inputs must be changed to keep them fully employed. b. the technically efficient combinations of the two goods. c. how demanders are willing to trade one good for another. d. the opportunity cost of one good in terms of the other.
Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input
a. True b. False Indicate whether the statement is true or false
A country has a comparative advantage in a good if
A. It always has an absolute advantage in the production of the good. B. It can produce more of the good than another country. C. It can specialize only in two goods. D. It can produce a good at a lower opportunity cost relative to another country.
The Cochrane-Orcutt and Prais-Winsten methods are iterative methods of feasible generalized least square (FGLS) estimation.
Answer the following statement true (T) or false (F)