Author Question: If the number of ITQs issued equals the efficient production level, what is the price of an ITQ? ... (Read 108 times)

misspop · **on:** Jun 29, 2018

If the number of ITQs issued equals the efficient production level, what is the price of an ITQ?

What will be an ideal response?

Question 2

If a natural monopoly does not inflate its costs, the output it produces is the smallest when the monopoly is

A) left unregulated.
B) regulated according to an average cost pricing rule.
C) regulated according to a marginal cost pricing rule.
D) regulated to maximize total surplus.

dlook33 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The price of an ITQ equals the marginal social benefit at the quota quantity minus the marginal private cost.

Answer to Question 2

A