Suppose technical change permits cable television companies to provide their services at lower rates. The share-the-gains, share-the-pains theory would predict that the regulators would

A) permit the firms to keep the savings and would lower prices only if the firms were pressured to do so.
B) force the firms to pass all the savings on to consumers in the form of lower prices.
C) force the firms to pass the savings on to consumers in the form of better service.
D) force the firms to pass some of the savings on to consumers and to permit the firms to keep some of the savings themselves.

Answer: D

Economics

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With positive externalities, market equilibrium occurs at a quantity that is greater than the socially optimal output

a. True b. False Indicate whether the statement is true or false

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In the case where a natural monopoly exists in an industry,

a. a competitive market structure will be costly and difficult to maintain. b. a competitive market structure will be more efficient and more equitable. c. government regulations will always improve efficiency in this industry. d. economies of scale will not be a consideration when analyzing the proper structure of the industry.

Economics