The figure shows the marginal revenue, marginal cost, and demand curves for an airline offering flights between London and Toronto. If the airline is regulated, public interest theory implies that _______ flights will be offered each month at a cost of _______ a flight.

200; $300
200; $100
250; $250
425; $125

The figure shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between London and Toronto. If the airline is regulated, public interest theory implies that total surplus will be

$61,500.00
$8,500.00
$176,375.00
$88,187.50

The figure shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between London and Toronto. If the airline is regulated, capture theory implies that _______ flights will be offered each month at a cost of _______ a flight.

250; $250
200; $100
200; $300
425; $125

Natural gas is a natural monopoly. The figure shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is __________________.

$24 and the loss per household is zero
$24 and 25,000 customers are served
$20 and 25,000 customers are served
$20 and the loss per household is $2

Natural gas is a natural monopoly. The figure shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________________.

$20 and 30,000 customers are served
$24 and deadweight loss is $10,000
$24 and deadweight loss is $10
$20 and the loss is $2 a household

If the producer of a natural monopoly can capture the regulator, then the monopoly will produce at the point where __________________.

marginal cost equals marginal revenue and consumer surplus is maximized
marginal cost equals marginal revenue and profit is maximized
demand equals marginal cost and total surplus is maximized
demand equals average total cost and producer surplus is maximized

If an industry faces a rate of return regulation, it will produce output at the point where the ___________ and ____________ curves intersect.

average total cost; demand
average total cost; marginal cost
marginal revenue; marginal cost
marginal cost; demand

Under rate of return regulation, a monopoly _______________________.

has an incentive to inflate costs
has an incentive to deflate costs and capture more of the market
makes an economic profit
sets price equal to marginal cost

Cartels are designed to ____________________.

reduce consumer surplus and producer surplus
reduce deadweight loss
increase total surplus
reduce consumer surplus and increase producer surplus

The railway, a crown corporation, hauls 6 billion tonnes of freight a year at a price of $3 a tonne. The average total cost is $3.25 a tonne. What is the subsidy that must be collected by taxation?

$0.25
$18 billion
$19.5 billion
$1.5 billion

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