problem set 14

problem set 14 - : requiring a natural monopoly to charge a...

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Dr. Seiji Steimetz ECON 101 Department of Economics California State University, Long Beach Page 1 of 1 Problem Set 10 Please complete the following end-of-chapter “ Problems and Applications in Hubbard & O’Brien. I encourage you to work these problems in groups. Chapter 14 ± 1.4 ± 1.5 ± 2.5 ± 2.10 ± 3.3 ± 3.4 ± 3.8 ± 5.4 ± 5.5 ± 5.9 ± 5.15 Additional Chapter 14 Problems *** 1. Look at Figure 14-15 on page 487. Using that figure (and its notation), derive formulas for calculating a. The deadweight loss from monopoly b. The transfer of consumer surplus to the monopoly’s producer surplus 2. Carefully review Figure 14-7 on page 494 (pertaining to the material on “ Regulating Natural Monopolies ”). Use this figure to answer the following questions: a. True or False
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Unformatted text preview: : requiring a natural monopoly to charge a price equal to marginal cost will result in a deadweight loss. b. True or False : requiring a natural monopoly to charge a price equal to marginal cost will result in an economic loss for the natural monopoly. c. True or False : requiring a natural monopoly to charge a price equal to average cost will result in an economic loss for the natural monopoly. d. True or False : requiring a natural monopoly to charge a price equal to average cost will result in a deadweight loss . Chapter 15 2.12 Important Note Be sure to look at all of the Review Questions as well. You dont need to write out answers to them just work through them verbally or discuss them with your study group....
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