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Answer to Question #52949 in Microeconomics for Yana

Question #52949
MULTIPLE CHOICE
1. Monopolists are criticized because they are inefficient. What is meant by this statement?
a. Monopolists charge too high a price.
b. Monopolists don't innovate enough to control pollution.
c. Monopolists produce a large quantity of waste.
d. Monopolists usually don't produce at the minimum of the ATC.
e. Monopolists could use their resources better elsewhere.

2. Average - cost pricing for a natural monopoly will:
a. result in the socially efficient level of output.
b. result in a less than socially efficient level of output.
c. result in a greater than socially efficient level of output.
d. result in the firm suffering economic losses.
e. result in the firm earning economic profit.
Expert's answer
 1. Monopolists are criticized because they are inefficient. What is meant by this statement?
 a. Monopolists charge too high a price.
 b. Monopolists don't innovate enough to control pollution.
 c. Monopolists produce a large quantity of waste.
 d. Monopolists usually don't produce at the minimum of the ATC.
 e. Monopolists could use their resources better elsewhere.
 2. Average - cost pricing for a natural monopoly will:
 a. result in the socially efficient level of output.
 b. result in a less than socially efficient level of output.
 c. result in a greater than socially efficient level of output.
 d. result in the firm suffering economic losses.
 e. result in the firm earning economic profit.
Solution
1. Monopolists are criticized because they are inefficient. What is meant by this statement?
 a. Monopolists charge too high a price.
 b. Monopolists don't innovate enough to control pollution.
 c. Monopolists produce a large quantity of waste.
 d. Monopolists usually don't produce at the minimum of the ATC.
 e. Monopolists could use their resources better elsewhere.
Answer - D
 2. Average - cost pricing for a natural monopoly will:
 a. result in the socially efficient level of output.
 b. result in a less than socially efficient level of output.
 c. result in a greater than socially efficient level of output.
 d. result in the firm suffering economic losses.
 e. result in the firm earning economic profit.
Answer - B

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