Can19L4

  • 1

    Rocky's Mountain Water is an unregulated natural monopoly that bottles fresh spring water. The figure shows the demand for Rocky's Mountain Water. Marginal cost is $0.20 per bottle. What is the price of a bottle of Rocky's Mountain Water?

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    $0.20
    $0.40
    $0.50
    $0.30

  • 2

    Rocky's Mountain Water is an unregulated natural monopoly that bottles fresh spring water. The figure shows the demand for Rocky's Mountain Water. Marginal cost is $0.20 per bottle. Rocky's maximizes ________________.

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    producer surplus
    total surplus
    output
    consumer surplus

  • 3

    The government decides to regulate Rocky's Mountain Water by imposing a marginal cost pricing rule. The figure shows the demand for Rocky's Mountain Water. Marginal cost is $0.20 per bottle. What is the price of a bottle of Rocky's Mountain Water and how many bottles does he sell?

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    $0.20; 300 thousand
    $0.20; 600 thousand
    $0.50; 300 thousand
    $0.50; 150 thousand

  • 4

    The government decides to regulate Rocky's Mountain Water by imposing a marginal cost pricing rule. The figure shows the demand for Rocky's Mountain Water. Marginal cost is $0.20 per bottle. What is the value of consumer surplus, and what is the value of producer surplus?

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    $18,000; zero
    zero; $180,000
    zero; $18,000
    $180,000; zero

  • 5

    The government decides to regulate Rocky's Mountain Water by imposing an average cost pricing rule. The figure shows the demand for Rocky's Mountain Water. Marginal cost is $0.20 per bottle and the total fixed cost per month is $80,000. What is the price of a bottle of Rocky's Mountain Water and how many bottles does he sell?

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    $0.40; 400 thousand
    $0.65; 150 thousand
    $0.20; 600 thousand
    $0.40; 200 thousand

  • 6

    The government decides to regulate Rocky's Mountain Water by imposing an average cost pricing rule. The figure shows the demand for Rocky's Mountain Water. Marginal cost is $0.20 per bottle and the total fixed cost per month is $80,000. The value of producer surplus is _________________.

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    $80,000
    $320
    $320,000
    $80

  • 7

    The average cost pricing rule ______________________.

    is neither totally in the public interest nor in the private interest
    maximizes surpluses
    is totally in the private interest
    is totally in the public interest

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