A cable company can add a subscriber for ________ and a market ...

[HCHenry]

A cable company can add a subscriber for ________ and a market failure occurs because the price charged ________.
 
  A) nearly zero marginal cost; exceeds marginal cost
  B) less than average cost; reduces consumer surplus
  C) nearly zero marginal cost; is extortionist
  D) average variable cost; increases producer surplus

Question 2

The above figure shows the market for rice in Japan. SDomestic represents the domestic supply curve, and Sworld represents the world supply curve. An import quota of 35 units would
 
  A) cause consumer surplus to fall by g.
  B) cause social welfare to fall by 35.
  C) increase domestic producer surplus by g.
  D) have no effect.

[marict]

Answer to Question 1

A

Answer to Question 2

C