Question 1
Refer to the information provided in Figure 13.8 below to answer the question that follows.
Refer to Figure 13.8. Each electricity producer has the given
LRAC curve. The total cost of producing 100,000 kilowatts per hour is minimized with ________ firm(s) in the industry.
◦ one
◦ ten
◦ one hundred
◦ Indeterminate from the given information.
Question 2
Refer to the information provided in Figure 13.8 below to answer the question that follows.
Refer to Figure 13.8. The long-run average cost curve is for the only firm producing electricity, and the market demand for electricity from all buyers is 100,000 kilowatts per hour. Due to economies of scale
◦ it makes economic sense for this firm to be the only producer of electricity.
◦ many firms should be in this industry.
◦ this firm should not be allowed to provide electricity.
◦ the government should take over the electricity market.
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