Answer to Question #183405 in Microeconomics for james

Question

QUESTION 1

A natural monopoly poses a difficult challenge for:

1. Competition policy.
2. Other firms in the industry.
3. Oligopolists.
4. Organists.
5. Originalists.

QUESTION 2

This would raise the average cost of production and force customers to pay more:

1. Government subsidies.
2. Tax rebates.
3. Tax breaks.
4. Splitting up a natural monopoly.
5. All of the above. 

QUESTION 3

In a situation with a downward-sloping average cost curve:

1. Two small firms will have a higher average cost than one larger firm.
2. One larger firm will have a higher average cost than two smaller firms.
3. Three smaller firms will have a lower average cost than two larger ones.
4. Consumers can never benefit.
5. No economic profits are possible.

QUESTION 4

An alternative to dealing with a natural monopoly is that regulators may decide:

1. To outlaw this product entirely.
2. To set prices and quantities produced for this industry.
3. Take an extended vacation.
4. To make this product strictly illegal.
5. All of the above.

Answer 1

QUESTION 1.

Competition policy

QUESTION 2.

4. Splitting up a natural monopoly

QUESTION 3.

2.One larger firm will have a higher average cost than two smaller firms.

QUESTION 4.

2.To set prices and quantities produced for this industry.