5. Explain the difference between socially optimal and fair return pricing regulations. Use a graph.
5. Explain the difference between socially optimal and fair return pricing regulations. Use a graph.
Homework Answers
Socially optimal price is the price which is set by the interaction of marginal social benefits ( MSB) and marginal social cost (MSC) .MSC Is some total of marginal financial costs and externalities. If externalities are negative then MSC> MC and vice versa. Socially optimal price remains higher/lower than fair regulated price depending on type of externalities . On the other hand fair return pricing regulations are set so that firms ( particularly imperfectly competitive firms) operate at P = ATC. Thus producers are only able to cover their costs and so earn only a normal profits, whereas in the former case firms can earn even higher profits .
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5. Explain the difference between socially optimal and fair
return pricing regulations. Use a graph.
Based on the graph shown here, what is the socially optimal (efficient) quantity of this good...
Based on the graph shown here, what is the socially optimal (efficient) quantity of this good ? Price ($) MSC $25 Supply (MPC) $15 $12 $8 Demand (MB) $2 50 100 Quantity O greater than 100 O 100 O between 50 and 100 O 50 less than 50
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3. In 1954, the U.S. Supreme Court ruled natural gas wellhead prices should be regulated in addition to the ongoing pipeline regulation. Each producer received a rate of return based on their cost of service. Natural gas producers had natural monopoly characteristics. A typical monopoly operates at a quantity where MR = MC and sets price based on the demand curve at that quantity. On the graph below, this is represented by point M, with corresponding price and quantity of...
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Use the graphs below to explain the differences between standard monopoly pricing and two-part pricing. 10...
Use the graphs below to explain the differences between standard
monopoly pricing and two-part pricing.
10 10 MC AC MC-AC 8 10Q 4 10 MR View as Text Download»
what are the answers to these questions? Use the graph below to answer que stions 1-5....
what are the answers to these questions?
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Based on the graph shown here, what is the socially optimal (efficient) quantity of this good ? Price ($) MSC $25 Supply (MPC) $15 $12 $8 Demand (MB) $2 50 100 Quantity O greater than 100 O 100 O between 50 and 100 O 50 less than 50
3. In 1954, the U.S. Supreme Court ruled natural gas wellhead prices should be regulated in addition to the ongoing pipeline regulation. Each producer received a rate of return based on their cost of service. Natural gas producers had natural monopoly characteristics. A typical monopoly operates at a quantity where MR = MC and sets price based on the demand curve at that quantity. On the graph below, this is represented by point M, with corresponding price and quantity of...
Use the graphs below to explain the differences between standard
monopoly pricing and two-part pricing.
10 10 MC AC MC-AC 8 10Q 4 10 MR View as Text Download»
what are the answers to these questions?
Use the graph below to answer que stions 1-5. It represents the market for the monthly U.S. beer market, a delicious product which nonetheless produces one of the largest negative externalities among popular goods Ssocial Sprivate 10 15 20 25 30 35 4045 50 55 60 65 0 5 Qin millions 1. What is the implied amount of the marginal damage in the above graph? 2. At what price is the socially optimal...
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