Forcing a natural monopoly to charge P = MC will not work. Indicate whether the statement is true or false ANSWER True . Since marginal cost is below average cost for a natural monopoly this would be equal to force the firm to incur a loss. This is not possible.
Date: September 9th, 2020
Downward sloping long-run supply curves occur in markets A) with learning-by-doing. B) with increasing returns to scale. C) with constant returns to scale. D) Either A or B ANSWER D
Date: September 9th, 2020
Which of the following markets would reach long-run equilibrium fastest? A) online retail B) auto dealers C) oil extraction D) World Series tickets ANSWER A
Date: September 9th, 2020
If firms in a competitive market are not identical, then an increase in cost will A) shift marginal cost to the right. B) push the most inefficient firms out of the market. C) push the most efficient firms out of the market. D) Need more information. ANSWER B
Date: September 9th, 2020
Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p. If the long-run supply curve is horizontal, then how many pounds of potatoes will be consumed in total? A) 0 B) 500 […]
Date: September 9th, 2020
Suppose a monopolist’s demand curve is P = 60 – Q, its cost function is TC = 10Q + 50, and its marginal cost is 10. If a governmental agency wished to set the price so that it created the smallest deadweight loss without causing the monopolist to have negative economic profits, this price would […]
Date: September 9th, 2020
Baseball teams shut down in the winter. This is an example of A) permanently leaving the industry because price is less than average fixed cost. B) temporarily leaving the industry because price is less than average variable cost. C) temporarily leaving the industry because price is less than average fixed cost. D) permanently leaving the […]
Date: September 9th, 2020
Firms in long-run perfect competition produce at A) increasing returns to scale. B) decreasing returns to scale. C) constant returns to scale. D) no returns to scale. ANSWER C
Date: September 9th, 2020
If the government wants to regulate a natural monopoly, it will force the firm to set price equal to A) average cost. B) marginal cost. C) marginal revenue. D) None of the above. ANSWER A
Date: September 9th, 2020
The government forcing a monopoly telecommunications company to allow other firms to use its cables is an attempt to A) regulate prices. B) decrease the monopoly market power by eliminating a natural monopoly. C) decrease the monopoly market power by increasing competition. D) None of the above. ANSWER C
Date: September 9th, 2020
