The government will have to subsidize a natural monopoly in the long run if regulators choose to pursue:
A. marginal cost pricing
B. fair-return pricing.
C. per se pricing.
D. any form of regulation.
Answer: A
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In which situation would a monopolist be maximizing profit when it produces at an output where MC < MR?
a. none because when MC < MR, profit is not maximized b. when the barriers of entry are overcome so that other firms enter c. when costs keep falling as output increases d. when price increases as output increases e. when economic profit is greater than normal profit
A farmer sells $25,000 worth of apples to individuals who take them home to eat, $50,000 worth of apples to a company that uses them all to produce cider, and $75,000 worth of apples to a grocery store that will sell them to households. How much of the farmer's sales will be included as apples in GDP?
a. $25,000 b. $150,000 c. $100,000 d. $125,000