(15 marks) Public utilities, like local electricity providers, are likely natural monopolies. They are typically regulated by the government with a rate-of-return regulation. Explain why public utilities like local electricity providers are natural monopolies. Explain the economic rationale behind the rate-of-return regulation on a natural monopoly. Given your above arguments, discuss whether the government should regulate firms other than a natural monopoly with this method.

(15 marks) Public utilities, like local electricity providers, are likely natural monopolies. They are typically regulated by the government with a rate-of-return regulation. Explain why public utilities like local electricity providers are natural monopolies. Explain the economic rationale behind the rate-of-return regulation on a natural monopoly. Given your above arguments, discuss whether the government should regulate firms other than a natural monopoly with this method.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 27CTQ: For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and...

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For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially monopolies. In a global market, where U.S. films compete with firms from other countries, would this policy make the same sense as it might in a purely domestic context?
If public utilities are a natural monopoly, what would be the danger in splitting them into a number of separate competing firms?
In what sense is a natural monopoly natural?
Intellectual property laws are intended to promote innovation, but some economists, such as Milton Friedman, have argued that such laws are not desirable. In the United States, there is no intellectual property protection for food recipes or for fashion designs. Considering the state of these two industries, and hearing in mind the discussion of the inefficiency of monopolies, can you think of any reasons why intellectual property laws might hinder innovation in some cases?
6) Why has global oil and gas consumption increased in recent decades, despitediscounting?a. Human population has increased.b. Exploration has made new reserves available.C.People have become richer, which has increased demand for oil and gas.d. Only a and c are correct.e. All of the above (a, b, and c) are correct.7) Without regulation, an industry that is a natural monopoly will tend to have:a. higher prices than is efficient, especially if demand is elastic.b. higher prices than is efficient, especially if demand is inelastic.C. higher consumpton than is efficient, especially if demand is elastic.d. higher consumption than is efficient, especially if demand is inelastic.
1.Microsoft is one of the leading software companies. Prior to 2000, Microsoft’s share of the market for personal computer operating systems stood above 80 per cent. However, since the twenty-first century Microsoft’s market share has steadily declined to 40 per cent. This is due to the rise in competing software producers such as Apple macOS (10%), Google's Android OS (35%), Linux Operating System (35%), and Apple iOS (5%). The market share of each company is provided in parentheses. Google and Linux have decided that it would be in their best interest to work together to serve the market. This is not common knowledge to the person’s outside of the companies. i. Draw how equilibrium price and quantity are determined in this industry. Hi does this refer to the monopoly market structure diagrams? 2. Allsmart’s demand curve is given by Q=10-P for its dishwashers. The marginal and average cost is $3 per dishwasher produced. Complete the following table. Photo below concerns…
7) Without regulation, an industry that is a natural monopoly will tend to have:a. higher prices than is efficient, especially if demand is elastic.b. higher prices than is efficient, especially if demand is inelastic.C. higher consumpton than is efficient, especially if demand is elastic.d. higher consumption than is efficient, especially if demand is inelastic.
Consider a natural monopoly with large fixed costs and a constant marginal cost of production, such as supplying water to household. Which condition can be used to regulate such a natural monopoly to ensure that the firm continues to operate while maximizing consumer surplus? Question 23Answer a. Demand = Average Cost b. Demand = Marginal Cost c. Marginal Cost = Marginal Revenue d. Price = Marginal Cost e. Price = Marginal Revenue
Draw the demand curve, marginal revenue, and marginal cost curves from Figure : , and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose the demand for the monopoly’s product increases dramatically. Draw the new demand curve. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. What do you think about the result? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
9-2 Distinguish marginal revenue and average revenue for a monopolist and explain why marginal revenue is less than average revenue3. (Monopoly) Suppose that a certain manufacturer has a monopoly on the sorority and fraternity ring business (a constant-cost industry) because it has persuaded the “Greeks” to give it exclusive rights to their insignia.a. Using demand and cost curves, draw a diagram depict- ing the firm’s profit-maximizing price and output level. b. Whyismarginalrevenuelessthanthepriceforthisfirm? c. On your diagram, show the deadweight loss that occurs because the output level is determined by a monopolyrather than by a competitive market. d. What would happen to price and output if the Greeksdecided to charge the manufacturer a royalty fee of $3 per ring?
16. Relative to a competitively organized industry, a monopoly is more likely to produce Select one: a. Less output, charges higher price, and earns economic profits. b. Less output, charges lower prices, and earns only a normal profit. c. More output, charges higher prices, and earns economic profits. d. Less output, charges lower prices, and earns economic profits.