Given the figure below, regulating the monopoly to guard against excessive profits and achieve the socially optimal price can be achieved through MR Lump-sum tax Price regulation or lump-sum tax Price regulation None of these

Given the figure below, regulating the monopoly to guard against excessive profits and achieve the socially optimal price can be achieved through MR Lump-sum tax Price regulation or lump-sum tax Price regulation None of these

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Government And Product Markets: Antitrust And Regulation

Section: Chapter Questions

Problem 4WNG

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17. help pls pls asap

Given the figure below, regulating the monopoly to guard against excessive profits and achieve the socially optimal price can be achieved
through
MR
Lump-sum tax
Price regulation or lump-sum tax
Price regulation
O None of these
P
P

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From the graph you drew to answer Exercise 11.6, would you say this transit system is a natural monopoly? Justify. Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology requited having a wile matting to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)
Why are urban areas willing to subsidize urban transit systems? Does the argument for subsidies make sense to you?
In the middle of the twentieth century, major U.S. cities had multiple competing city bus companies. Today, there is usually only one and it runs as a subsidized, regulated monopoly. What do you suppose caused the change?
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What is the usual shape of a marginal revenue cuwe for a monopolist? Why?
If the transit system were regulated to operate with no subsidy (i.e., at zero economic profit), what approximate output would it supply and what approximate price would it charge?
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If public utilities are a natural monopoly, what would be the danger in deregulating them?
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Classify the following as a government-enforced barrier to entry, a banker to entry that is not government-enforced, or a situation that does not involve a barrier to entry. A patented invention A popular but easily copied restaurant recipe An industry where economies of scale are very small compared to the size of demand in the market A well-established reputation for slashing prices in response to new entry A well-respected brand name that has been carefully built up over many years
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