Member of the Month

KilaTsunami
October, 2024

Online

Welcome to the Newschoolers forums! You may read the forums as a guest, however you must be a registered member to post. Register to become a member today!

Micro Econ help?

profile picture
yourthemannowdog
Posts: 4541 - Karma: 313
I suck at economics. If someone could guide me through these two problems i will give them karma and photoshop their face onto anything. ANYTHING

first question is:
What is the problem with marginal cost pricing in the natural monopoly situation? How do regulatory agencies in the United States usually handle the problem?

Second one is:
Can a firm make losses by producing the rate of output at which marginal revenue equals marginal cost? Why?
Apr 7 2012 12:08PM
0 0
profile picture
yourthemannowdog
Posts: 4541 - Karma: 313
Ok i figured out the first one (had to do with MR=MC and price ceilings). Still don't know about the second one
Apr 7 2012 12:16PM
0 0
profile picture
Lucas
Posts: 4881 - Karma: 1,575
Yes
Apr 7 2012 12:35PM
0 0
profile picture
PON3
Posts: 3817 - Karma: 783
Well in monopolies your marginal cost to the company will be low. But the marginal cost to the customer is going to be really high since in a monopoly situation with no competitors, they can set the price and costs of anything they want :)
Apr 7 2012 12:39PM
0 0
profile picture
TechnoPotamus
Posts: 11626 - Karma: 3,522
i'll hafta check my book but i want to say yes, depending upon demand.

even if marginal revenue is equal to marginal cost, a firm could, in theory produce too much, and thus have excess supply above the quantity demanded by the market. In that case the excess supply could be considered a "loss".
Apr 7 2012 1:00PM
0 0
profile picture
PON3
Posts: 3817 - Karma: 783
There also maybe some where in the value chain of the business that is producing extra cost.

But what techno said, Too much inventory is a bad thing depending on the business. And you can generate bad debts or losses with too much inventory.
Apr 7 2012 1:40PM
0 0
profile picture
yourthemannowdog
Posts: 4541 - Karma: 313
Thank you! Photoshop coming soon
Apr 7 2012 2:02PM
0 0
profile picture
yourthemannowdog
Posts: 4541 - Karma: 313
Click for larger image
Apr 7 2012 2:18PM
0 0
profile picture
TechnoPotamus
Posts: 11626 - Karma: 3,522
hahaha i would help out people with questions so much more often if this was the kind of thanks i got everytime
Apr 7 2012 3:27PM
0 0
All times are Eastern (-5)