Fill in the Blank QuestionFill in the blank question.If the objective of government is to achieve efficiency, it should establish a legal price for the monopolist that is equal to its marginal cost.

Multiple Choice QuestionIf the objective of government is to achieve allocative efficiency, what kind of price should government establish for the monopolist?Multiple choice question.One that is below its marginal cost.One that is equal to its marginal cost.One that is above its marginal cost.One that is fair to all consumers.

Fill in the Blank QuestionFill in the blank question.The monopolist seeks maximum profit, not maximum unit profit.

If the government wants to regulate a natural monopoly it will force the firm to set price equal toGroup of answer choicesaverage cost.marginal cost.marginal revenue.None of the above.

If the government attempts to force a natural monopoly to charge a price equal to marginal cost

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.