When a natural monopoly is regulated using a marginal cost pricing rule, what can you say about the firm's profit and the market's efficiency?
What will be an ideal response?
Using a marginal cost pricing rule, the monopoly is incurring an economic loss. However, there is an efficient quantity of output produced so that the market is efficient with no deadweight loss.
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The cost of using a good for some specific period of time is called the ________ of the good
A) issue price B) rental price C) auction price D) market price
In many large American cities it is common to witness private motorists pulling up to municipal bus stations and allowing perfect strangers to ride into downtown with them in order to take advantage of the high occupancy vehicle lanes that require
two or more drivers. Using the concept of elasticity of demand and total revenue explain why public transit authorities might be concerned with this practice.