Refer to the diagram for a natural monopolist. If a regulatory commission set a maximum price of P 2 , the monopolist would:
A. produce output Q 1 and realize an economic profit.
B. produce output Q 3 and realize an economic profit.
C. close down in the short run.
D. produce output Q 3 and realize a normal profit.
D. produce output Q 3 and realize a normal profit.
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If the price of a visit to Sea World exceeds the marginal cost of the visit by $13, a producer surplus exists for Sea World." Is this statement true or false? Explain your answer
What will be an ideal response?
One of the tendencies that is common among firms regulated using rate of return regulation is to
A) increase production to an inefficient level. B) inflate the costs of production. C) incur an economic loss. D) understate the costs of production. E) overstate their total revenue.
Which of the following statements is true?
A) Testing with data is essential to develop a good theory. B) Knowledge of economics complicates decision making. C) Cost-benefit analysis can be applied only to limited economic decisions. D) Economics is more of a theoretical subject with limited applications in the real world.
In the absence of the Ricardo-Barro effect, an increase in the government deficit results in a ________ real interest rate and a ________ equilibrium quantity of investment
A) higher; higher B) higher; lower C) lower; higher D) lower; lower