If a firm is earning just enough to cover all its economic profits does that mean it's not making a profit?
What will be an ideal response?
Ques. 2If a natural monopoly is regulated using the marginal cost pricing rule, how does the regulation affect prices, outputs, profits, and the distribution of surpluses? What are the pros and cons to this method of regulation?
What will be an ideal response?
Ques. 3Explain how an increase in the price of leather brought about by shift in tastes may lead to an increase in the supply of beef.
What will be an ideal response?
Ques. 4What is a household's choice set or opportunity set?
What will be an ideal response?
Ques. 5If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit. Is the previous statement correct or incorrect?
What will be an ideal response?
Ques. 6A single-price natural monopoly that is regulated to set price equal to marginal cost incurs an economic loss. True or false? Explain.
What will be an ideal response?
Ques. 7What is a natural monopoly and what problem does natural monopoly pose for regulators?
What will be an ideal response?
Quick Reply
