A firm should always shut down if it is earning negative profits.

How does the government determine the quota amount that will produce an efficient use of a common resource?

What will be an ideal response?

Compared to the profit-maximizing equilibrium of a natural monopoly, a price cap regulation ________ the firm's price and ________ the firm's output

A) raises; decreases B) lowers; increases C) raises; increases D) lowers; decreases