Why do government regulators not enforce marginal cost pricing for natural monopolies? What are the common regulatory solutions?
What will be an ideal response?
If government regulators enforce marginal cost pricing for natural monopolies, then the firms will face losses and eventually go out of business. Instead, the common regulatory solutions include allowing firms to charge a price that covers the average cost of production or to set a price that ensure a normal return on investment.
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The period of time between when monetary policy is enacted and when it actually begins to affect the economy is called the
A) recognition lag. B) implementation lag. C) impact lag. D) liquidity lag.
Which of the following statements is true?
A) Marginal analysis is a key tool used while optimizing in levels. B) Comparative statics is a tool that can be used in both optimization in levels and optimization in differences. C) Marginal analysis is the comparison of economic outcomes before and after some economic variable is changed. D) Comparative statics involves calculating the incremental cost of moving from one alternative to the next best alternative.
The money-creation formula is oversimplified because it assumes that
A. every recipient of a bank loan will redeposit the proceeds in another bank. B. loan recipients will not take any of the proceeds in cash. C. every bank lends out all excess reserves. D. All of these responses are correct.
In the production of goods and services, trade-offs exist because
A. society has only a limited amount of productive resources. B. human wants and needs are limited at a particular point in time. C. we have abundant resources to choose from. D. not all production is efficient.