(D) total costs? (E) profit or loss? (F) Will the monopoly need a subsidy? (G) If so, how much? 3. If cost-of-service regulation (fair-return price or average cost pricing) is imposed on this monop- olist, what will be the level of (A) output?, (B) price? (C) total revenue? (D) total costs? (E) profit or loss? 4. What are the advantages and disadvantages of marginal cost pricing? 5. What are the advantages and disadvantages of cost-of-service regulation? Regulating Monopoly Suppose you are an analyst for a board that regulates local monopolies. Your supervisor has given you the three questions below. Using the information in Figure 37.1, answer your supervisor's questions. Figure 37.1 Regulating a Monopoly $5.00 w 4.00 MG 3.00 ATC 2.00 1.00 MR 1,000 2,000 3,000 4,000 5,000 QUANTITY 1. If this monopolist is not regulated, what will be the level of (A) output? (B) price?. (C) total revenue? (D) total costs? (E) profit or loss? 2. If this monopolist is regulated by marginal cost pricing (i.e., the socially optimal price), what will be the level of (A) output? (B) price? (C) total revenue? COSTS/REVENUE

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Related questions
Question
(D) total costs?
(E) profit or loss?
(F) Will the monopoly need a subsidy?
(G) If so, how much?
3. If cost-of-service regulation (fair-return price or average cost pricing) is imposed on this monop-
olist, what will be the level of
(A) output?,
(B) price?
(C) total revenue?
(D) total costs?
(E) profit or loss?
4. What are the advantages and disadvantages of marginal cost pricing?
5. What are the advantages and disadvantages of cost-of-service regulation?
Transcribed Image Text:(D) total costs? (E) profit or loss? (F) Will the monopoly need a subsidy? (G) If so, how much? 3. If cost-of-service regulation (fair-return price or average cost pricing) is imposed on this monop- olist, what will be the level of (A) output?, (B) price? (C) total revenue? (D) total costs? (E) profit or loss? 4. What are the advantages and disadvantages of marginal cost pricing? 5. What are the advantages and disadvantages of cost-of-service regulation?
Regulating Monopoly
Suppose you are an analyst for a board that regulates local monopolies. Your supervisor has given you
the three questions below. Using the information in Figure 37.1, answer your supervisor's questions.
Figure 37.1
Regulating a Monopoly
$5.00
w 4.00
MG
3.00
ATC
2.00
1.00
MR
1,000 2,000 3,000 4,000 5,000
QUANTITY
1. If this monopolist is not regulated, what will be the level of
(A) output?
(B) price?.
(C) total revenue?
(D) total costs?
(E) profit or loss?
2. If this monopolist is regulated by marginal cost pricing (i.e., the socially optimal price), what will
be the level of
(A) output?
(B) price?
(C) total revenue?
COSTS/REVENUE
Transcribed Image Text:Regulating Monopoly Suppose you are an analyst for a board that regulates local monopolies. Your supervisor has given you the three questions below. Using the information in Figure 37.1, answer your supervisor's questions. Figure 37.1 Regulating a Monopoly $5.00 w 4.00 MG 3.00 ATC 2.00 1.00 MR 1,000 2,000 3,000 4,000 5,000 QUANTITY 1. If this monopolist is not regulated, what will be the level of (A) output? (B) price?. (C) total revenue? (D) total costs? (E) profit or loss? 2. If this monopolist is regulated by marginal cost pricing (i.e., the socially optimal price), what will be the level of (A) output? (B) price? (C) total revenue? COSTS/REVENUE
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