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Exam 13: Natural Monopolies: Deregulation

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Question 1

Multiple Choice

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All of the following are examples of natural monopolies except

A) Local telephone companies.
B) Electricity companies.
C) College bookstores.
D) Railroad companies.

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C

Question 2

Multiple Choice

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What development turned the cable TV market into a contestable one?

A) Economies of scale.
B) Satellite and broadband technology.
C) Cable TV firms raised prices.
D) Cable TV firms were earning economic profits.

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Question 3

Multiple Choice

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The first major regulatory target in the United States was

According to "Sleep Rules Raise Trucking Costs," in 2013 the Federal Motor Carrier Safety Administration estimated the new rules regulating the transportation industry would cost trucking companies about $2 billion.What benefits did the government expect from the costly regulations?

Deregulation implies that government failure is worse than the market failure that regulation is designed to correct.

If the government forces a natural monopoly to produce the output level at which P = MC, the firm will

Output regulation is likely to result in

Government failure can never be worse than the market failure it attempts to correct.

The major problem with price efficiency regulation is that the natural monopolist loses money or earns negative profits.

The argument for government intervention implies that government regulation can improve market outcomes.

Initially the number of airline firms fell in response to deregulation.

In Figure 27.2, an unregulated natural monopoly will produce

The administrative costs of regulation include the opportunity costs of the factors of production used by government to administer the regulations.

The gap between long-distance telephone rates and local telephone rates widened after long-distance service was deregulated.

Which of the following industries was substantially deregulated over the last several decades?

Discuss specific cases that lead to an increase in the concentration and market power from deregulation.

When the CAB allowed airlines to charge high prices on longer, more efficient routes as long as they maintained service on shorter, unprofitable routes, it was allowing

The use of marginal cost pricing in Figure 27.1 will result in

Which of the following is used as an antitrust tool that focuses on the structure of industry?

To maximize profit, a natural monopolist produces the level of output at which