What is the fair -return price for a regulated natural monopoly and why is this more...

What is the fair

-return price for a regulated natural monopoly and why is this more usual that the

socially optimal price?

Expert Solution

Rahul Sunny answered 6 months ago

What is the socially optimal price for a regulated monopoly? How does the fair return price...

What is the socially optimal price for a regulated monopoly? How does the fair return price differ from the socially optimal price?Philosophically, do you believe a company that is producing a non-essential good should be prevented from achieving monopoly status if they abide by the law? Why or why not?

1.What is a natural monopoly? Explain with a graph how a regulated natural monopoly sets its...

1.What is a natural monopoly? Explain with a graph how a regulated natural monopoly sets its price. 2.Draw a graph that shows a monopoly firm making economic profit in the short run. Be sure your diagram includes the monopolist’s demand, marginal revenue, average total cost, and marginal cost curves. Be sure to indicate the profit maximizing output and price. Are these profits sustainable in the long run?

What is a natural monopoly? Why is government justified in regulating a natural monopoly?

What is natural monopoly? Explain why governments tend to regulate the price charged by natural monopolies?

When a natural monopoly is regulated using an average cost pricing rule, what can you say...

When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Why would it be economically efficient to require a natural monopoly to charge a price equal...

Why would it be economically efficient to require a natural monopoly to charge a price equal to marginal cost? Why do most regulatory agencies require natural monopolies to charge a price equal to average cost instead?

Natural monopoly firms are often regulated so that they can only charge prices set by the...

Natural monopoly firms are often regulated so that they can only charge prices set by the authorities. Under one approach, prices are based on the monopolist’s costs so that for any given quantity of sales, the monopolist can only set prices equal to its average costs. 1. Why might regulators believe that forcing the monopoly to charge a price equal to average cost is a good outcome? Does this price regulation maximise social welfare? What problems do you see with...

Find an example of a regulated monopoly. (If your example is a regulated monopoly, you may continue...

Find an example of a regulated monopoly. (If your example is a regulated monopoly, you may continue with it). Do you agree that this monopoly should be regulated? If yes, how does regulating it benefit the society? (You may also consider what would happen if it weren't regulated) If no, what are your arguments against regulating it?

What is a natural monopoly? Why do we allow them? What are the policy options in...

What is a natural monopoly? Why do we allow them? What are the policy options in controlling them? Why can their prices (profits) be difficult to control and set? Use graphs to illustrate your answer as appropriate.

In a natural monopoly, the government will try to set the price at which the demand...

In a natural monopoly, the government will try to set the price at which the demand curve intersects the monopolist's long-run marginal cost curve. long-run average total cost curve. long-run marginal revenue curve. long-run average fixed cost curve.

Question