Which of the following statements are true for the AT&T case (1982)? Check all that apply: The Department of Justice sued AT&T because it was a natural monopoly. Following the case, rates decreased for both local and long-distance telecommunications services. The Department of Justice sued AT&T because AT&T was charging unfairly high fees for access to its local telephone lines. Imagine you are a lawyer for the defense in an antitrust case. What strategies would you pursue in defending your client? Check all that apply: Argue for the application of the rule of reason instead of the per se rule. Argue that the relevant market was broader than the prosecution claimed. Argue that the results of any anticompetitive actions your client may have taken were socially desirable.

If public utilities are a natural monopoly, what would be the danger in splitting them into a number of separate competing firms?

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Consider the only electric company in a small town, which you can assume operates as a natural monopoly. The following graph shows the demand curve for electricity services per month, as well as the provider's marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. Complete the first row of the following table. Pricing Mechanism Short Run Long - Run Decision Quantity Price Profit (Subscriptions) (Dollars per subscription) Profit Maximization Marginal - Cost Pricing Average - Cost Pricing Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Complete the second row of the previous table. Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Complete the third row of the previous table. True or…

ull alfa 8:01 am 1. For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small. * O True False

Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.

Consider the only internet service provider in a small town, which you can assume operates as a natural monopoly. The following graph shows the demand curve for internet services per month, as well as the provider's marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. PRICE (Dollars per subscription) 100 90 80 70 40 20 10 0 0 2 || Pricing Mechanism Profit Maximization 4 Complete the first row of the following table. MR 8 10 12 14 QUANTITY (Thousands of subscriptions) Marginal-Cost Pricing Average-Cost Pricing O True Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. O False 16 ATC -MC Complete the third row of the previous table. 18 20 D Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Complete the second row of the…

**You only need to answer Question C*

3.5 If the inverse demand curve is p = 120-Q and the marginal cost is constant at 10, how does charging the monopoly a specific tax of t = 10 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes the tax revenue)? What is the incidence of the tax on consumers? (Hint: See Solved Problem 11.50.) M

The figure to the right shows the market demand for electricity and the average total cost and marginal cost of producing electricity for a utility company. Suppose the utility company is a regulated natural monopoly. If government regulators want to achieve economic efficiency, then they will regulate a price of $ —— per kilowatt hour. (Enter a numeric response using a real number rounded to two decimal places.)