Consider the Case of a Natural Monopoly with Falling Long-

question 35

Multiple Choice

Consider the case of a natural monopoly with falling long- run average costs.If regulation sets the price equal to marginal cost,then

• A)the demand curve would shift to the left.
• B)the firm would earn economic profits.
• C)shortages would result.
• D)the outcome would be allocatively inefficient.
• E)the firm would operate at a loss and eventually go out of business.

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Definitions:

Wild Salmon

Salmon that live and reproduce in their natural environments in oceans and rivers, not raised in captivity for commercial purposes.

Transgenic Salmon

Genetically modified salmon that have been altered to grow faster than wild-type salmon, often involving the insertion of growth hormone genes from other fishes.

Salmon Farms

Aquaculture operations specifically aimed at breeding and raising salmon in controlled environments for commercial purposes.

Pollution

The introduction of harmful substances or products into the environment, resulting in negative effects on living organisms and the natural ecosystem.