Top Posters
Since Sunday
5
o
5
4
m
4
b
4
x
4
a
4
l
4
t
4
S
4
m
3
s
3
New Topic  
SirJohnny SirJohnny
wrote...
Posts: 116
Rep: 0 0
A year ago

The diagram below shows the market demand curve and the cost curves for a single firm.

Short description: A graph plots output against price. Long description: The horizontal axis representing output lists the following values from left to right: Q subscript 1 and Q subscript 2. The vertical axis representing dollars lists the following values from bottom to top: P subscript 1, P subscript 2, and P subscript 3. The graph plots three curves and five points. The points are as follows: a (Q subscript 1, P subscript 3), b (Q subscript 2, P subscript 2), c (Q subscript 2, P subscript 1), d (Q subscript 1, P subscript 2), and e (Q subscript 1, P subscript 1). The curve, LRAC passes through the following points: a and b. The curve, MC passes through the point, c. The curve, D passes through the following points: a and c. Curve, D intersects the curves, LRAC and MC at points, a and c.

FIGURE 12-7

Refer to Figure 12-7. Suppose this firm is being regulated using a policy of marginal-cost pricing. To maintain the resulting level of output,



▸ the government would have to subsidize the firm or it will eventually shut down.

▸ the regulator would have to allow the firm to keep the monopoly profits at this level of output.

▸ the average total cost curve would have to shift up.

▸ the government would have to accept the allocative inefficiency associated with this level of output.

▸ the demand curve would have to the left.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
Author:
Read 21 times
1 Reply
Replies
Answer verified by a subject expert
wukong81wukong81
wrote...
Posts: 123
Rep: 0 0
A year ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

SirJohnny Author
wrote...

A year ago
This calls for a celebration Person Raising Both Hands in Celebration
wrote...

Yesterday
Thank you, thank you, thank you!
wrote...

2 hours ago
Just got PERFECT on my quiz
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  1076 People Browsing
Related Images
  
 2636
  
 615
  
 1016
Your Opinion
Which 'study break' activity do you find most distracting?
Votes: 741