Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to achieve the socially optimal allocation of resources, it will have to:
A. tax the monopolist P 3 P 1 per unit to prevent the monopolist from realizing an economic
profit.
B. subsidize the monopolist or the monopolist will go bankrupt in the long run.
C. subsidize the monopolist P 1 P 4 per unit to allow the monopolist to break even.
D. tax the monopolist P 1 P 2 per unit to prevent the monopolist from realizing an economic
profit.
B. subsidize the monopolist or the monopolist will go bankrupt in the long run.
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Indicate whether the statement is true or false
Engel's law suggests that as income rises, the demand for food
a. rises less than proportionately b. rises more than proportionately c. rises proportionately d. falls e. none of the above
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Indicate whether the statement is true or false