Homework Clinic
Social Science Clinic => Economics => Topic started by: nevelica on Jun 29, 2018
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The Chicago Heights school district study found that
A) teachers have a low occurrence of moral hazard.
B) students did much better with a teacher who received merit pay.
C) adverse selection results among teachers with poor students.
D) teachers did not response to pay incentives.
Question 2
When a natural monopoly is regulated using a marginal cost pricing rule, what can you say about the firm's profit and the market's efficiency?
What will be an ideal response?
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Answer to Question 1
B
Answer to Question 2
Using a marginal cost pricing rule, the monopoly is incurring an economic loss. However, there is an efficient quantity of output produced so that the market is efficient with no deadweight loss.