ECO 550 Final Exam (36 Questions with Correct Answers)
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production process exhibiting increasing returns to scale<br />
constant cost industry<br />
avoidance of duplication of facilities<br />
protection of consumers from price discrimination<br />
Question 10<br />
____ as practiced by public utilities is designed to encourage greater usage and therefore spread<br />
the fixed costs of the utility’s plant over a larger number of units of output.<br />
Answer<br />
Peak load pricing<br />
Inverted block pricing<br />
Block pricing<br />
First degree price discrimination<br />
Question 11<br />
In natural monopoly, AC continuously declines due to economies in distribution or in<br />
production, which tends to found in industries which face increasing returns to scale. If price<br />
were set equal to marginal cost, then:<br />
Answer<br />
price would equal average cost.<br />
price would exceed average cost.<br />
price would be below average cost.<br />
price would be at the profit maximizing level for natural monopoly<br />
Question 12<br />
Regulatory agencies engage in all of the following activities except _______.<br />
Answer<br />
controlling entry into the regulated industries
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