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.
D
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Which of the following is true?
i. Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value. ii. Allocative efficiency occurs when marginal benefit equals marginal cost. iii. A demand curve is a marginal cost curve. A) only ii B) only i C) only iii D) i and ii E) ii and iii
It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal cost curve. In order for this to be true, which of the following additional assumptions are necessary? I. That the firm seek to maximize profits. II. That the marginal cost curve be positively sloped. III. That price exceeds average variable cost. IV. That price exceeds average total cost
a. All of the above. b. I and II but not III and IV. c. I and III but not II and IV. d. I and II only. e. I, II and III, but not IV.