Question :
81) Suppose a cell-phone service provider has monopoly rights for : 1384266
81) Suppose a cell-phone service provider has monopoly rights for a geographical region and is earning monopoly profits. If the government then imposes a lump-sum tax of $X on this firm, the effect is
A) an increase in consumer surplus due to the tax revenue.
B) to increase the firm’s marginal costs and reduce its profit by $X.
C) to increase the firm’s average costs and reduce its profit by $X.
D) a reduction in output and an increase in price.
E) an increase in output and a decrease in price.
82) The economic efficiency of a natural monopoly can be improved with the use of two-part tariffs because it allows the monopoly to
A) charge users according to their willingness to pay.
B) charge residential users different rates than business users.
C) charge users according to their ability to pay.
D) charge users separately for fixed and variable costs.
E) lower its total costs.
83) In the long run, the imposition of average-cost pricing in natural monopolies, such as Manitoba Hydro and New Brunswick Power, would generally lead to
A) allocative efficiency.
B) productive efficiency.
C) distorted investment decisions.
D) a reduction in the output by these firms.
E) both allocative efficiency and productive efficiency.
84) Consider a regulated natural monopoly, such as an electricity distribution company, that faces falling long-run average costs. If it is forced to price its output at average cost it will provide
A) less output than what is socially optimal.
B) more output than what is socially optimal.
C) the socially optimal amount of output.
D) more output than can be absorbed by the market.
E) so little output that there will be a shortage.
85) A regulated monopoly that faces rising long-run costs (at its current level of output) and which is forced to price its output at average cost will provide
A) less output than what is socially optimal.
B) more output than what is socially optimal.
C) the socially optimal amount of output.
D) more output than what can be absorbed by the market.
E) so little output that there will be a shortage.
86) Consider a natural monopoly that is producing an output level such that it is experiencing decreasing returns to scale. If government policy requires the firm to set price equal to marginal cost,
A) the outcome will be allocatively efficient and the firm will be earning profits.
B) the outcome will be allocatively inefficient and the firm will be earning profits.
C) the outcome will be allocatively efficient and the firm will be incurring losses.
D) the outcome will be allocatively inefficient and the firm will be incurring losses.
E) the outcome will be allocatively efficient and the firm will be earning zero profits.
87) Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve. (Assume the service provided is basic cable and units are household connections.)
A) less than $9.00
B) $9.00
C) between $9.00 and $10.25
D) $10.25
E) higher than $10.25
88) Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve. (Assume the service provided is basic cable and units are household connections.)
A) lower than $9.00
B) $9.00
C) between $9.00 and $10.25
D) $10.25
E) higher than $10.25
89) Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve. (Assume the service provided is basic cable and units are household connections.)
A) lower than $9.00
B) $9.00
C) between $9.00 and $10.25
D) $10.25
E) higher than $10.25
90) Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve. (Assume the service provided is basic cable and units are household connections.)
A) lower than $9.00
B) $9.00
C) lower than $10.25
D) $10.25
E) higher than $10.25
