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Exam 27: Natural Monopolies: Deregulation

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Question 51

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The collapse of AT&T's natural monopoly in long-distance telephone service was caused by

A) Satellite technology that made it easier and less expensive for new companies to provide long-distance service.
B) The takeover of the telephone industry by the U.S.government.
C) Government regulation because of illegal collusion between ATamp;T and foreign competitors.
D) Inadequate profits.

E) All of the above
F) C) and D)

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Question 52

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Which of the following is true about this firm?

A) It is a natural monopoly.
B) Society can benefit from government regulation using marginal cost pricing without a subsidy.
C) Marginal cost pricing will assure technical efficiency.
D) Profit regulation will assure allocative efficiency.

E) B) and C)
F) A) and D)

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Question 53

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Which of the following is a form of government intervention that is designed to correct market failures?

The major aim of government regulation is to

Deregulation of the airline industry has

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

One consequence of airline deregulation in the 1980s was an increased concentration ratio.

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 of the telephone industry has reduced price competition and the volume of telephone service,ceteris paribus.

Output regulation for the natural monopoly in Figure 27.2 would result in an output of

In Figure 27.2,profit regulation will lead the natural monopoly to produce

The marginal benefits of regulation should exceed the marginal costs of regulation if additional regulations are to be imposed.

A natural monopoly occurs because of

Deregulation in railroads,airlines,and telephone service has generally resulted in higher prices.

A natural monopoly has no incentive to limit its costs of production under which type of regulation?

The "JetBlue Effect" has caused all of the following except

The argument for regulation is that markets can generate imperfect outcomes,while the argument for deregulation is that government sometimes worsens market outcomes.

If government intervention fails to improve upon market outcomes,this is known as market failure.

The best way to address a natural monopoly without dismantling the economies of scale is

Deregulation of the railroad,airline,and electricity industries has yielded substantial benefits: more competition,lower prices,and improved services.