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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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