Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 12, Problem 12QP
To determine
Explain the electric companies that have the nature of monopolies.
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Our textbook discusses two methods of regulating natural monopolies. One of them is price cap regulation. One of the following answers is an example of price cap regulation. Which one?
Group of answer choices
A government setting the price that a cable company can charge over a period of time by looking at the cable company's accounting costs and then adding a normal rate of profit.
A government setting a price level for a public utility several years in advance.
When a regulated public utility plays a large role in setting up the regulations that they will follow.
When a firm no longer is considered a natural monopoly because of decreased demand.
What distinguishes a natural monopoly from other monopolies? What are the pros and cons of regulating natural monopolies? Does your answer differ depending on the specific product or industry being regulated?
Should internet service providers be required to provide service to all customers and be treated and regulated as monopolies similar to electric companies?
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- Monopolies are viewed differently by economists and businesspersons. Which of the following would likely be most important to a businessperson when thinking about monopolies? Check all that apply. The quantity enjoyed by consumers in a market with monopoly versus competitive industries. The consumer surplus that results from monopoly compared to competitive industries. Comparing and contrasting consumer demand found in monopoly and competitive industries. The specifics of how a group of local roofers founded an association to seek government licensing requirements for all roofers.arrow_forwardWhat is the difference between government granted monopolies and free market monopolies? Which one is more cost efficient and why?arrow_forwardBusiness journalists frequently write that the financial markets expect that firms that possess market power (e.g., firms that have prominent brand names) will raise their prices on a regular (e.g., annual) basis. Is this a correct characterization of the pricing behavior of firms with market power (e.g., firms that are monopolies)?arrow_forward
- Discuss monopoly markets and the ethical weaknesses of monopolies.arrow_forward32. Which of the following distinguishes a natural monopoly from all other market structures, including non-natural, or classic, monopolies? A single firm with market power Multiple suppliers having higher production costs than a single supplier Average total costs that are rising at the profit-maximizing point Productive and allocative inefficiency at the profit-maximizing quantity and price A unique product 35. Which of the following explains the price a monopolistically competitive firm charges when it is earning zero economic profits? The price is equal to average total cost at the quantity where marginal revenue equals marginal cost. The price is equal to average total cost at a quantity where marginal revenue is less than marginal cost. The price is greater than average total cost at the quantity where marginal revenue equals marginal cost. It is equal to average total cost at a quantity where marginal revenue is…arrow_forwardthree examples of what economists might consider "good" monopolies throughout history. Why were they considered to be "good".arrow_forward
- According to your book, how does dead weight loss become worse for monopolies than from Perfect competition? What would you suggest to make monopolies have a smaller dead weight loss moving forward? According to your book, what type of Monopolies are actually good for society? Why are they good for society?arrow_forwardtrue or false In the case of natural monopolies, economists argue that production is more efficient with several smaller firms rather than one large firm.arrow_forward
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