Question : 101) Refer to Figure 12-6. Suppose this firm being regulated : 1384268

101) Refer to Figure 12-6. Suppose this firm is being regulated using a policy of marginal-cost pricing. In this case,

A) allocative efficiency is achieved because profits are maximized.

B) the result is allocatively inefficient because the firm is suffering losses.

C) the result is allocatively inefficient because the firm is earning profits.

D) the result is allocatively inefficient because the marginal cost curve lies below the ATC curve.

E) allocative efficiency is achieved because price equals marginal cost.

102) Refer to Figure 12-6. Suppose this firm is being regulated using a policy of marginal-cost pricing. To maintain the resulting level of output

A) the government would have to subsidize the firm or it will eventually shut down.

B) the regulator would have to allow the firm to keep the monopoly profits at this level of output.

C) the government would have to accept the allocative inefficiency associated with this level of output.

D) the average total cost curve would have to shift up.

E) the demand curve would have to the left.

103) Refer to Figure 12-6.  Suppose this firm is a government-owned natural monopoly and imposes a price so as to achieve allocative efficiency in this market.  The amount of tax revenue that the government must raise elsewhere in the economy to offset the losses of this firm is represented by the area

A) ae

B) bc

C) edbc

D) db

E) 0b

104) Refer to Figure 12-7.  If this firm were unregulated and profit maximizing, its profit would be ________ per day.

A) $0

B) $10 000

C) $60 000

D) $110 000

E) $120 000

105) Refer to Figure 12-7.  Suppose this firm is being regulated using a policy of average-cost pricing.  The resulting price and output would be ________ per kwh and ________ kwh per day.

A) $0.06; 1 million

B) $0.07; 1.5 million

C) $0.09; 1.4 million

D) $0.11; 1 million

E) $0.12; 1 million

106) Refer to Figure 12-7.  Suppose this firm is being regulated using a pricing policy of average-cost pricing.  In this case, economic profits are equal to

A) $10 000.

B) $6000.

C) $126 000.

D) $28 000.

E) $0.

107) Refer to Figure 12-7.  Suppose this firm is being regulated using a policy of marginal-cost pricing.  The resulting price and output would be ________ per kwh and ________ kwh per day.

A) $0.06; 1 million

B) $0.07; 1.5 million

C) $0.08; 1.5 million

D) $0.09; 1.4 million

E) $0.12; 1 million

108) Refer to Figure 12-7.  Suppose this firm is being regulated using a policy of marginal-cost pricing.  In this case, economic profits are equal to

A) -$15 000.

B) -$28 000.

C) $0.

D) $90 000.

E) -$50 000.

109) There has been a trend toward less government regulation and ownership in oligopolistic industries in most industrialized countries since the 1980s.  One reason for this is

A) policymakers came to understand that many oligopolistic firms were operating at their minimum efficient scale, thereby producing an efficient outcome.

B) policymakers came to understand that many oligopolistic firms were producing output levels that resulted in allocative efficiency.

C) policymakers realized that they did not have effective tools for promoting efficiency.

D) Canada’s Competition Bureau, and similar agencies in other countries were so successful at promoting competition that such regulation is no longer required.

E) domestic firms are now exposed to more international competition due to falling transportation and communication costs.

110) In many cases throughout Canadian history, governments have sought to control the behaviour of oligopolistic firms through either ownership or regulation.  Policymakers are now skeptical of such practices because

1) many innovations in products and production methods that have led to increases in living standards are attributable to firms in oligopolistic industries;

2) it became clear that oligopolistic industries can achieve both productive and allocative efficiency without government intervention;

3) the regulatory body often ends up protecting the firms from competition.

A) 1 only

B) 2 only

C) 3 only

D) 1 and 2

E) 1 and 3