question archive 1)Suppose a natural monopolist has fixed costs of $15 and a constant marginal cost of $3

1)Suppose a natural monopolist has fixed costs of $15 and a constant marginal cost of $3

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1)Suppose a natural monopolist has fixed costs of $15 and a constant marginal cost of $3. The demand for the product is as follows:

 

Price (per unit) $10 $9 $8 $7 $6 $5 $4 $3 $2 $1
Quantity demanded (units per day) 0 2 4 6 8 10 12 14 16 18

Under these conditions:

a. What price and quantity will prevail if the monopolist isn't regulated?

b. What price-output combination would exist (MC=p)(MC=p),

c. What price-output combination would exist with profit regulation (zero economics profit)? Illustrate your answers.

2)The Telecommunications Act of 1996 requires local phone companies to charge "reasonable" rates for transmission access. What is a "reasonable" rate?

3)Which of the following best represents a public good?

a. Cable TV,

b. Interstate highway,

c. Preparatory private high school,

d. The Florida turnpike,

e. The Mall.

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