What is the drawback of forcing a natural monopolist to use a marginal cost pricing rule?
A) No deadweight loss is eliminated.
B) The firm will incur an economic loss.
C) The gain in consumer surplus will be less than the loss in producer surplus, thus creating additional deadweight loss.
D) None of the above answers is correct.
B
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The equilibrium price will rise and the equilibrium quantity might increase, decrease, or stay the same when the
A) demand and the supply of a good both increase. B) demand for a good increases and the supply of it decreases. C) demand for a good decreases and the supply of it increases. D) demand and the supply of a good both decrease.
The table above describes the market for paper. The production of paper produces pollution. There are no external benefits. Now suppose a Pigovian tax is successfully implemented and the efficient quantity of paper is produced
What is the total tax revenue collected by the government per week? A) $120 B) $840 C) $1,200 D) $1,800