If a regulatory commission sets the regulated price equal to marginal cost for a natural monopoly:
a. losses will result.
b. government subsidies will be unnecessary.
c. the firm will earn economic profits.
d. new firms will want to enter.
e. resource use will not be optimal.
a
Economics
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For a normal good, an increase in consumer income will lead to I. a movement down the demand curve II. a rightward shift in the demand curve III. a reduction in supply
A) I only B) II only C) III only D) Both II and III
Economics
Assume that production of a good generates external benefits for others. The equilibrium price of the good will be ____ and the equilibrium quantity ____ for efficient resource allocation
a. too high; too high. b. too high; too low. c. too low; too high. d. too low, too low.
Economics