Use the drop-down menus to select answers that best complete the following sentences about profit, output, and price regulations. Choose A, B or C for each of the bolded sections. 1. Profit Regulation (A.- Requires firms to set price equal to ATC, B.-mandates the quantity that the natural monopoly produces C.-requires firms to set price equal to MC). Under this regulation, the firm (might lower quality of the product as a way of increasing profits, loses its incentive to reduce costs, achieves allocative efficiency; however, the firm may be unable to make a profit). 2. Price Regulation (A.- Requires firms to set price equal to ATC, B. - mandates the quantity that the natural monopoly produces C. - requires firms to set price equal to MC. Under this regulation, the firm (A. -might lower quality of the product as a way of increasing profits B.-loses its incentive to reduce costs C. - achieves allocative efficiency; however, the firm may be unable to make a profit. 3. Output Regulation (A.- Requires firms to set price equal to ATC, B.-mandates the quantity that the natural monopoly produces C. - requires firms to set price equal to MC). Under this regulation, the firm (A. -might lower quality of the product as a way of increasing profits B.-loses its incentive to reduce costs C. -achieves allocative efficiency; however, the firm may be unable to make a profit.
Use the drop-down menus to select answers that best complete the following sentences about profit, output, and price regulations. Choose A, B or C for each of the bolded sections. 1. Profit Regulation (A.- Requires firms to set price equal to ATC, B.-mandates the quantity that the natural monopoly produces C.-requires firms to set price equal to MC). Under this regulation, the firm (might lower quality of the product as a way of increasing profits, loses its incentive to reduce costs, achieves allocative efficiency; however, the firm may be unable to make a profit). 2. Price Regulation (A.- Requires firms to set price equal to ATC, B. - mandates the quantity that the natural monopoly produces C. - requires firms to set price equal to MC. Under this regulation, the firm (A. -might lower quality of the product as a way of increasing profits B.-loses its incentive to reduce costs C. - achieves allocative efficiency; however, the firm may be unable to make a profit. 3. Output Regulation (A.- Requires firms to set price equal to ATC, B.-mandates the quantity that the natural monopoly produces C. - requires firms to set price equal to MC). Under this regulation, the firm (A. -might lower quality of the product as a way of increasing profits B.-loses its incentive to reduce costs C. -achieves allocative efficiency; however, the firm may be unable to make a profit.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Use the drop-down menus to select answers that best complete the following sentences about profit,
output, and price regulations. Choose A, B or C for each of the bolded sections.
1. Profit Regulation (A.- Requires firms to set price equal to ATC, B. - mandates the quantity that the
natural monopoly produces C. - requires firms to set price equal to MC). Under this regulation, the firm
(might lower quality of the product as a way of increasing profits, loses its incentive to reduce costs,
achieves allocative efficiency; however, the firm may be unable to make a profit).
2. Price Regulation (A.- Requires firms to set price equal to ATC, B. - mandates the quantity that the
natural monopoly produces C. - requires firms to set price equal to MC). Under this regulation, the firm (A.
- might lower quality of the product as a way of increasing profits B. - loses its incentive to reduce costs C.
- achieves allocative efficiency; however, the firm may be unable to make a profit).
3. Output Regulation (A.- Requires firms to set price equal to ATC, B. - mandates the quantity that the
natural monopoly produces C. - requires firms to set price equal to MC). Under this regulation, the firm (A.
- might lower quality of the product as a way of increasing profits B. - loses its incentive to reduce costs C.
-achieves allocative efficiency; however, the firm may be unable to make a profit).
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