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# 1: For a theoretical natural monopolist with down-sloping average total cost (ATC) curve -If government sets price below the unregulated monopolist

1: For a theoretical natural monopolist with down-sloping average total cost (ATC) curve

-If government sets price below the unregulated monopolist price, but above the firm's ATC, the profit maximizing monopolist firm will go out of business and not produce any output.

-If government sets price below the unregulated monopolist price, but above the firm's ATC, the profit maximizing monopolist firm will DECREASE its level of output.

-If government sets price below the unregulated monopolist price, but above the firm's ATC, this will not chnge the profit maximizing monopolist firm's level of output.

-If government sets price below the unregulated monopolist price, but above the firm's ATC, the profit maximizing monopolist firm will INCREASE its level of output.

2: Given the total cost function for a firm is

(Q = output and TC = total cost)

Q TC

0  0

1  20

2  39

3  56

4  71

5  84

6  95

the average total cost of producing six units of output is \$15.83

True

False

3: Given the total cost function for a firm is

Q = output and TC = total cost

Q  TC

0  20

1  40

2  60

3  80

4 100

5 120

6 140

the production function that generated these costs must have increasing marginal product of the variable input (labor)

True

False

4: Given the total cost function for a firm is

Q = output and TC = total cost

Q  TC

0   20

1   40

2   60

3   80

4   100

5   120

6   140

The average total cost of producing 6 units of output is \$23.33

True

False

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