Author Question: If a public utility is subject to average-cost pricing regulation, it will: a. earn a normal rate ... (Read 122 times)

lilldybug07 · **on:** Jun 30, 2018

If a public utility is subject to average-cost pricing regulation, it will:
a. earn a normal rate of return.
b. produce the socially efficient level of output.
c. suffer economic losses without a subsidy.
d. earn an above-normal rate of return.

Question 2

Suppose that the world price of kiwi fruit (10 per box) is below the domestic price (12 per box). A tariff of 1 per box would:
a. cause foreign producers to be better off, because the price they charge is now higher by 1 per box.
b. cause domestic producers to be worse off by 5 per box.
c. make domestic consumers worse off as they would be paying 1 more than the domestic price.
d. make domestic consumers pay 1 more than the free trade price, but still 1 less than the domestic price.
e. cause domestic producers to be worse off by 10 per box.