When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?
What will be an ideal response?
Using an average cost pricing rule, the monopoly is making zero economic profit. However, there is an inefficient quantity of output produced so that the market is inefficient and there is a deadweight loss.
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If brokerage commissions on bond sales decrease, then, other things equal, the demand for bonds will ________ and the demand for real estate will ________
A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase
If a firm hires one worker and eliminates four units of capital, and hires one more worker and replaces three more units of capital, keeping output constant, then
A) workers and capital are perfect substitutes. B) the firm is operating inefficiently because capital is more efficient than workers. C) the firm is experiencing a diminishing marginal rate of technical substitution. D) there are decreasing returns to scale.
The struggle among various producers for the consumer's business called ____________ .
a. socialism b. competition c. incentive d. self-regulation
If consumers decide to be more frugal and save more out of their income, then this will cause
A) a shift in the supply curve for loanable funds to the right. B) a shift in the supply curve for loanable funds to the left. C) a movement to the right along the supply curve for loanable funds. D) a movement to the left along the supply curve for loanable funds.