Author Question: The government of your state wants Gigantic Software Corp, which is a natural monopoly, to stay in ... (Read 97 times)

RYAN BANYAN · **on:** Jun 30, 2018

The government of your state wants Gigantic Software Corp, which is a natural monopoly, to stay in business yet still produce where price equals marginal cost. The government might choose to
a. set a price ceiling 10 percent lower than its previous level
b. impose a tax on the company for each dollar of sales
c. establish regulations that raise the company's cost of doing business
d. provide a subsidy to the company to cover the loss and ensure a normal profit
e. replace the company's top management

Question 2

If you were to put the following effects of a decrease in demand into the sequence in which they occur, which would be last?
a. The demand curve facing each individual firm drops.
b. Each firm reduces quantity supplied to the point where marginal cost equals its now-lower marginal revenue.
c. In the short run, the market price drops.
d. Market output falls.
e. A short-run loss forces some firms out of business in the long run.