What is the definition of a natural monopoly? Give a couple of
examples of the companies that would be considered natural
monopolies. Briefly explain the reason why they are called
"natural" and why they are economically desirable. Can natural
monopolies maintain their status forever? Briefly explain your
answer.
1. Define any 10 terms. Give examples where pertinent.
Fixed rates net asset value (NAV)
Adjustable rates amortization
PMI mortgage lien
Assets under management reconveyance
Secondary deed of trust first deed of trust
Mortgage back securities credit default swaps
Research the terms, monopoly and natural monopoly, and post a
scholarly definition of each term.
Compare and contrast the social costs and benefits of a
monopoly.
Provide at least two options for the society to consider when
dealing with a natural monopoly
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?
Define, give examples, and discuss the role of several instances
in supporting arguments. Define, give examples, and discuss the
role of statistics in supporting arguments.
Give an example of a natural monopoly (derived from economies
of scale).
a. What is the motivation behind regulating natural
monopolies?
b. Discuss the difficulty that the government faces when
trying to regulate natural monopolies. Discuss the pros and cons of
Average Cost Pricing and Marginal Cost Pricing.
c. How might the shortcomings of these methods (from (b) be
overcome? Explain.
Natural Monopoly
A. Draw a natural monopoly in an equilibrium with a profit.
Clearly label the relevant areas.
B. Show how this monopoly could be regulated to produce (and
price) at MC, or at AC. A part of this answer should explain/show
how regulation effects the demand and MR curves.
C. Briefly mention the advantages/disadvantages of each (P=MC,
P=AC).