Prior to the advent of MCI (later named Worldcom) the telecommunications industry largely relied on one kind of technology – the copper wire
Why do you suppose that the use of microwave technology employed by MCI offered an important challenge to the principle of natural monopoly that existed at the time justifying the reliance on one company – AT&T.
It meant that competing firms could effectively compete without having to replicate the infrastructure (that is fixed costs) of the sole existing firm – AT&T and be able to compete for customers at a lower cost.
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Suppose equilibrium for an economy occurs when C + I + G + X = $14 trillion. If the real Gross Domestic Product (GDP) is $13 trillion, then unplanned inventories are
A) increasing, and real Gross Domestic Product (GDP) will contract. B) increasing, and real Gross Domestic Product (GDP) will expand. C) decreasing, and real Gross Domestic Product (GDP) will expand. D) decreasing, and real Gross Domestic Product (GDP) will contract.
Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's average total cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is $4
If Gene is regulated using a marginal cost pricing rule, the price he is allowed to charge to wash 100 cars is A) $10. B) $8. C) $6. D) $4. E) $400.