Monopolies are socially inefficient because the price they charge isGroup of answer choicesabove marginal cost.above demand.equal to demand.equal to marginal revenue.

​Monopolies will tend to produce a greater quantity and charge higher prices than perfectly competitive industries.Group of answer choicesTrueFalse

One problem with government operation of monopolies is thatGroup of answer choicesa benevolent government is likely to be interested in generating profits for political gain.monopolies typically have rising average costs.a government-regulated outcome will increase the profitability of the monopoly.the government typically has little incentive to reduce costs.

Which of the following can eliminate the inefficiency inherent in monopoly pricing?Group of answer choicesArbitragePrice discriminationCost-plus pricingRegulations that force monopolies to reduce their levels of output

Natural monopolies tend to favor consumers by providing better pricing and greater innovative technologies.TrueFalse

It has been proposed that natural monopolists should be allowed to determine their profit-maximizing outputs and prices, and then government should tax their profits away and distribute them to consumers in proportion to their purchases from the monopoly. Is this proposal as socially desirable as requiring monopolists to equate price with marginal cost or average total cost? Explain. multiple choiceYes, it is more socially desirable than equating price with average total cost.Yes, it has the same outcome as fair-return pricing.No, it does not consider that the output of natural monopolists would still be at the suboptimal level where P < MC.No, it does not consider that the output of natural monopolists would still be at the suboptimal level where P > MC.