If Economies of Scale Are High and Government Regulators Set

question 186

Multiple Choice

If economies of scale are high and government regulators set prices equal to a monopolist's marginal cost,:

• A) the monopolist will still earn a profit, just smaller than with no regulation.
• B) the monopolist will be taking a loss.
• C) there will be more incentive to innovate.
• D) the market will be more efficient than if the government regulators set prices equal to average cost.

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Definitions:

Displaced Workers

Individuals who have lost their jobs due to economic changes, technological advancements, or other factors outside their control.

Export Markets

Overseas markets where goods and services produced in one country are sold.

Supply and Demand Analysis

An economic model that determines the price of a product in a market by evaluating the balance between the quantity of a good or service available and the desire (or demand) for that good or service.

Equilibrium Price

is the price at which the quantity of goods supplied is equal to the quantity of goods demanded.