If a public utility is subject to average-cost pricing regulation, it will:
a. earn a normal rate of return
b. produce the socially efficient level of output.
c. suffer economic losses without a subsidy.
d. earn an above-normal rate of return.
a
Economics
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Which characteristic is associated with monopolistic competition?
A) collusion B) product differentiation C) small number of firms D) awareness of rival firms in the market
Economics
Real money demand in the economy is given by
L = 0.3Y - 600i, where Y is real income and i is the nominal interest rate. In equilibrium, real money demand L equals real money supply M/P. Suppose that Y equals 2000 and the real interest rate is 5%. (a) At what rate of inflation is seignorage maximized? (b) What is the maximum amount of seignorage revenue?
Economics