Select the correct answer: A (legal; natural) monopoly exists when one firm can meet the entire...

Select the correct answer:

A (legal; natural) monopoly exists when one firm can meet the entire market demand at a lower average total cost than two or more firms could.

A monopoly that is able to sell different units of a good or service for different prices is a (natural-price; price-discriminating) monopoly.

The act of obtaining special treatment by the government to create an economic profit is called (government surplus; rent seeking).

Regulated firms have an incentive to inflate their costs under (rate of return; price cap) regulation.

The U.S. Postal Service has a (natural; legal) monopoly on first class mail delivery.

A (single-price; price discriminating) monopoly maximizes profit by producing the quantity at which marginal revenue equals marginal cost and then charging the maximum price that consumers are willing to pay for that quantity.

The key idea behind price discrimination is to convert (consumer surplus; producer surplus) into economic profit.

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Expert Solution

A natural monopoly exists when one firm can meet the entire market demand at a lower average total cost than two or more firms could. Such a firm has lower average total cost for the number of products produced and sold. There is a huge initial set up cost.

A monopoly that is able to sell different units of a good or service for different prices is a price-discriminating monopoly. By this method they are able to earn multiple profits from multiple consumers groups.

The act of obtaining special treatment by the government to create an economic profit is called rent seeking. By this method, lobbying is done to devise policies that are in favour of the monoopolies or oligopolies firms

Regulated firms have an incentive to inflate their costs under rate of return regulation. Under price cap regulation, the incentive is to keep the cost under control

The U.S. Postal Service has a legal monopoly on first class mail delivery.

A single-price monopoly maximizes profit by producing the quantity at which marginal revenue equals marginal cost and then charging the maximum price that consumers are willing to pay for that quantity.

The key idea behind price discrimination is to convert consumer surplus into economic profit.

Rahul Sunny answered 1 year ago

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