wsa4 - Chapter 15 10. (Regulating Natural Monopolies) The...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 15 10. (Regulating Natural Monopolies) The following graph represents a natural monopoly. a. Why is this firm considered a natural monopoly? The firm is a natural monopoly because its long run average cost curve slopes downward throughout the range of market demand. The lowest average cost occurs when there is only on firm. b. If the firm is unregulated, what price and output would maximize its profit? What would be its profit or loss? Price=b; quantity=x; profit=beji c. If a regulatory commission establishes a price with the goal of achieving allocative efficiency, what would be the price and output? What would be the firm’s profit or loss? Price=h; quantity=z; loss=ghnm d. If a regulatory commission establishes a price with the goal of allowing the firm a “fair return,” what would be the price and output? What would be the firm’s profit or loss? Price=f; quantity=y the firms profit would be normal e. Which of the prices in parts b, c, and d maximizes consumer surplus? What problem, if any, occurs at this price? When the price is set at H it maximizes consumer surplus. Though the firm is suffering losses and will only remain in business with government help. 11. (Origins of Antitrust Policy) Identify the type of anticompetitive behavior illustrated by each of the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

wsa4 - Chapter 15 10. (Regulating Natural Monopolies) The...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online