Refer to Figure 15-15. Why won't regulators require that Erickson ...

[dmcintosh]

Refer to Figure 15-15. Why won't regulators require that Erickson Power produce the economically efficient output level?
 
  A) because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit
  B) because Erickson Power will earn zero profit
  C) because there is insufficient demand at that output level
  D) because Erickson Power will sustain persistent losses and will not continue in business in the long run

Question 2

Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at 7 and she charges 7. What is the value of the consumer surplus enjoyed by her customers?
 
  A) 39 B) 28 C) 11 D) 0

[ndhahbi]

Answer to Question 1

D

Answer to Question 2

C