Use the above figure. Suppose that a regulatory agency requires this natural monopolist to engage in marginal cost pricing. This would lead to
A) losses, which would drive the monopolist out of business in the long run.
B) profits, which would encourage new producers to enter the industry in the long run.
C) profits, but new firms cannot enter the industry in the long run due to high barriers to entry.
D) losses, which would encourage the monopolist to lower costs in the long run.
A
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Which of the following is an example of a Pigovian tax?
A) a tax imposed on a utility that internalizes the cost of externalities caused by the utility B) payments by utilities to obtain tradable emission allowances C) payments for licenses to pollute D) a payroll tax
Markets can be missing:
A. because a market is taxed. B. when the sale of a particular service is banned. C. when miscommunication of information between buyers and sellers leads to the wrong equilibrium price. D. All of these are true.
The opportunity cost of watching television is:
a. all of the alternative programs that appear on other stations. b. zero because there is no money expenditure involved. c. the alternative use of the time foregone by watching the program. d. zero if it benefits you.
Suppose that the price elasticity of demand for snow shovels is –1.2 . What would have to happen to the price of a snow shovel for the quantity demanded to fall from 2,000 to 1,800? Use the midpoint formula in your calculations
What will be an ideal response?