For instance, in the case of a monopoly supplier of natural gas, once the pipes have been laid in an area, the marginal cost of adding an additional user is very low. With no regulation, the monopolist would produce where marginal revenue equals marginal cost. This is very inefficient, as...
Because the marginal cost of any one output depends on the levels of all other outputs and all other inputs, the issue of separability must be considered on the formation of appropriate policy. This paper and the cost models used to generate these results are the basis for the case study ...
Natural MonopolyLogarithmic Long-run Cost FunctionSubadditivityEconomics EducationIntermediate MicroeconomicsThis study proposes a logarithmic long-run cost function and its relevant short-run cost lines which can be used to teach second-year or upper-level undergraduates the topic of natural monopoly in ...
Why would it be economically efficient to require a natural monopoly loading to charge a price equal to the marginal cost? Production cost : Production costs corresponds to the overall cost paid by a firm to manufacture a given amount of a commodity. ...
With respect to regulating a natural monopoly, which of the following pricing rules to regulate the natural monopoly firm will most likely require the government to provide a subsidy sufficient to compensate the firm in order to avoid the firm to leave the market() A. Average cost pricing. B...
If the government regulates the price a natural monopolist can charge to be equal to the firm’s marginal cost, the government will likely need to subsidize the firm.ANS: T DIF: 2 REF: 15-5 NAT: AnalyticLOC: Monopoly TOP: Regulation MSC: Interpretive 相关知识点: 试题来源: 解析 T ...
Natural monopoly is a term used in economics to refer to two different things:1、An industry is said to be a natural monopoly if one firm can produce a desired output at a lower social cost than two or more firms— that is, there are economies of scale in social costs....
Conventional economic theory points to the price-marginal cost margin and the ensuing deadweight loss. But this hypothesis does a poor job of explaining the way that regulators behave in practice. This paper proposes an alternative hypothesis: that natural monopoly regulation exists to protect the ...
Natural monopoly analysis The following graph gives the demand(D)curve for5G LTE services in the fictional town of Streamship Springs. The graph also shows the marginal revenue(MR)curve, the marginal cost (MC)curve, and the average total...
When one hears the term monopoly, it is usually associated with violations of federal anti-trust laws and, attributed to inflated prices, partial market failure. While monopolies are generally frowned upon in the free market, natural monopolies can be beneficial and do occur in certain situations....