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 Class: XIDS 2002 - WDYK:Interdisciplinary Studies Subject: Interdisciplinary University: University of West Georgia Term: Fall 2010
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 When the marginal product curve is downward sloping, the average product curve might be either upward or downward sloping. With a technological change that increases productivity, the average product curve ________ and the marginal product curve ________. shifts upward; shifts upward In the above table, the marginal product is greatest when the second worker is hired In the figure above, the marginal product of the second worker is 5 units.
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 Marginal product is the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. A firm's total cost (TC) equals the sum of its fixed cost plus its variable cost. The above table shows the total product schedule for the campus book store. If employees are paid \$6 per hour and there are no other variable costs, then what is the marginal cost (MC) per book of increasing book sales from 83 to 87 books per hour? \$1.50 In the above table, the total cost of producing 9 units of output is \$70.
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 In the above table, the total variable cost of producing 16 units of output is \$100. The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is \$200 and workers cost \$10 per hour. The average variable cost of producing 10 baseball hats per hour is \$2. Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).What is Dustin's long-run average cost if the output is 3,000 copies per day? 3.7 cents per copy Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4). Dustin's Plant 2 will be economically efficient if the firm produces ________ copies per day. 4,800 copies per day.
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 Economies to scale refer to the range of output over which the long-run average cost falls as output increases. When long-run average costs decrease as output increases, there are economies of scale. When a firm experiences economies of scale, its ________ cost curve slopes ________. long-run average; downward If a firm is in a perfectly competitive industry, then the demand for its product is perfectly elastic.
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 Because each perfectly competitive firm sells a product identical to that of the other firms, each firm's output is a perfect substitute for the output of any other firm. Consider the perfectly competitive firm in the above figure. What will the firm choose to do in the short-run and why? stay in business because the firm's economic loss is less than fixed costs A perfectly competitive firm's short-run supply curve is the same as its MC curve above the minimum of the AVC curve. When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner, makes an income equal to his best alternative forgone income.
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 All economic questions arise because we want more than we can get. Pete has just decided to go to college to learn how to become a certified public accountant. Pete has made a decision that will increase the nation's human capital. If the marginal cost of an activity exceeds the marginal benefit, then an alternative action will be selected. The figure above illustrates Mary's production possibilities frontier. If Mary wants to move from point b to point c, she must give up some of good Y in order to obtain more of good X
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 A nation can produce at a point outside its PPF never. A nation can consume at a point outside its PPF when it trades with other nations. In the above figure, curve b shows the (bycycles) bottles of soda that people are willing to forgo to get another bicycle. In the above figure, when 2000 bicycles are produced each month, we can see that Both answers A and B are correct.
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 In 2006, Country X and Country Y had the same production possibilities, illustrated in the figure above. Country X chose to produce at point A, while country Y chose to produce at point B. In 2012, most likely, Country X will be at point such as ________ while Country Y will be at point such as ________. N; Q An opportunity cost of economic growth is the decrease in production of consumption goods in the present time period. The tradeoff between current consumption and the production of capital goods also reflects a tradeoff between current consumption and future consumption. In the figure above, suppose that Mac and Izzie trade and reach point c. Then neither Mac nor Izzie produce outside their production possibilities frontiers.
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 In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is correct? Brandon has a comparative advantage only in planting. Refer to the above figure. Mario is self-sufficient and so is Mia. Each produces 6 dishes of pasta and 4 pizzas. Mario and Mia decide to specialize and trade. After they have specialized and traded, compared to the initial situation, Mia's opportunity cost of pasta has ________ and Mario's opportunity cost of a pizza has ________. increased, increased In goods markets firms sell to households. In factor markets households sell to firms. The price of a bag of corn chips is \$3, and the price of a bottle of soda is \$1. What is the relative price of a bag of corn chips? 3 bottles of soda
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 If shoes rise in price, the demand curve for shoes ________ and the quantity of shoes demanded ________. does not shift; decreases Ham and eggs are complements. If the price of ham rises, the demand for eggs will decrease and the demand curve for eggs will shift leftward. The price of jet fuel falls. This fall shifts the supply curve of airplane trips rightward. Blank DVDs and prerecorded DVDs are substitutes in production. An increase in the price of a blank DVD will lead to a decrease in the supply of prerecorded DVDs.
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 If the price elasticity of demand for peanut butter is 2.4, then peanut butter has an elastic demand. If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price inelastic, she should raise her price because she knows that the percentage decrease in the quantity demanded will be smaller than the percentage increase in price. An increase in Abigail's income decreases her demand for used cars. For her, used cars are an inferior good. Duke increased his spending on steak from \$7 to \$11 per week because of a 12 percent salary increase, so his income elasticity of demand for steak is 3.7.
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 If the supply curve is vertical then supply is perfectly inelastic. Which of the following goods would best be described as being in perfectly inelastic supply? the original portrait of "Whistler's Mother" In the above figure, consumer surplus is measured in (icecream) dollars. Suppose that Hot Dog House produces hot dogs for \$0.25 each. If the Hot Dog House can sell hot dogs for \$0.50 each, then definitely the Hot Dog House can earn a producer surplus.
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 The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________. \$60 an hour In the above figure, if the market price rises from \$100 to \$125 per ton of wheat, then producer surplus increases. Total surplus is defined as consumer surplus + producer surplus. Overproduction compared to the efficient amount implies that for the last unit produced marginal social cost exceeds marginal social benefit.
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 A rent ceiling set below the equilibrium price restricts the quantity supplied but not the quantity demanded. In the above figure, a rent ceiling of \$300 per month would result in a shortage of 7000 units. In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of \$3 per hour will have no effect on the market. In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of \$6 per hour will initially decrease employment from 30 to 20 million hours per year
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 Consider the market for purple magic markers. The demand for purple magic markers is perfectly elastic and the supply is upward sloping. If sellers of purple magic markers are taxed \$1 per marker, how will the tax be divided between the buyer and seller? The sellers will pay the entire tax. Of the \$3 per pizza tax illustrated in the above figure, the All of the above answers are correct. If economic profits are equal to zero then normal profits are being earned Under oligopoly, there are ________ firms selling products that are ________. a few; either identical or different
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 The long run is distinguished from the short run because only in the long run the quantities of all resources can be varied. The short run . Both answers B and C are correct. A firm's total product curve shows how the amount of output changes when the quantity of labor changes. Using the data in the above table, if the firm employs 3 workers, total product (measured in units per day) and average product and marginal product of the third worker (measured in units per worker) are 19, 6 1/3, and 7 respectively.
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 Which of the following shifts the AVC curve upward at Barney's Bagel Bakery? an increase in the hourly wage that Barney pays his workers The above (incomplete) table provides information about the relationships between output and various cost measures. The total cost (TC) of producing 9 units of output is \$190. A firm is operating in its range of economies of scale and is on both its LRAC curve and its short-run ATC curve. At that level of output, the slope of its LRAC curve is negative and the slope of its ATC curve is negative. In the above figure, the long-run average cost curve exhibits economies of scale between 5 and 10 units per hour.
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 Marginal revenue is equal to the change in total revenue divided by the change in quantity sold. In the above figure, if the milk industry is perfectly competitive, then the firm's marginal revenue curve is represented by curve H. The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E. B Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should decrease her output.
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 In the above figure, at a price of \$8, a perfectly competitive firm produces ________ and it ________. some output; earns a normal profit The figure above shows the marginal revenue and costs of a perfectly competitive firm. When the firm produces 170 units marginal revenue equals marginal cost. In the short run, perfectly competitive firms ________ but in the long run, perfectly competitive firms make ________. can incur economic losses; zero economic profit Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's profit maximizing level of output? 48 pages per hour
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 In the long-run equilibrium, perfectly competitive firms produce where average total cost is minimized. In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost. lowest; lowest The following are key features of a monopoly EXCEPT the monopoly has severe diseconomies of scale. Which of the following is NOT a legal barrier to entry? innovation
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 A natural monopoly is an industry in which economies of scale exist at the level of output where the market demand curve intersects the long-run average cost curve. Given the market demand and cost data in the above figure, the existence of two firms equal sized firms producing a total of 8 million cubic feet of natural gas means that the long-run average cost of producing natural gas is 20 cents per cubic foot. Given the market demand and cost data in the above figure, the existence of a monopoly firm producing 8 million cubic feet of natural gas makes it possible to produce natural gas at a long-run average cost of 10 cents per cubic foot A monopolist maximizes its profit by producing the amount of output where . marginal revenue equals marginal cost.
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 Which of the following is a characteristic of monopoly in the long run? Economic profits can exist. The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night? \$111 For the unregulated, single-price monopoly shown in the figure above, when its profit is maximized, output will be 4 units per year and the price will be \$6. The unregulated, single-price monopoly shown in the figure above will produce where its demand is elastic.
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 The unregulated, single-price monopoly shown in the figure above has a total economic profit of \$8. If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will ________ its price and ________ its output. lower; increase Which of the following is true for BOTH monopoly and perfect competition? Profits are maximized by producing at the level of output where marginal revenue is equal to marginal cost. A key difference between a monopoly and a perfectly competitive firm is that the monopolist has a marginal revenue curve that lies below its demand curve.
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 One difference between perfectly competitive markets and single-price monopoly markets is that marginal revenue equals price for perfectly competitive firms, but not for single-price monopolists. For a natural monopoly, fixed costs are a large percentage of total costs. Under a marginal cost pricing rule, a regulated natural monopoly incurs an economic loss and there is no deadweight loss. If a natural monopoly has an average cost pricing rule imposed, the rule will reduce the consumer surplus and generate a deadweight loss when compared to a marginal cost pricing rule
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## List View: Terms & Definitions

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When the marginal product curve is downward sloping, the average product curve might be either upward or downward sloping.
With a technological change that increases productivity, the average product curve ________ and the marginal product curve ________. shifts upward; shifts upward
In the above table, the marginal product is greatest when thesecond worker is hired
In the figure above, the marginal product of the second worker is5 units.
Marginal product isthe increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same.
A firm's total cost (TC) equals the sum of its fixed cost plus its variable cost.
The above table shows the total product schedule for the campus book store. If employees are paid \$6 per hour and there are no other variable costs, then what is the marginal cost (MC) per book of increasing book sales from 83 to 87 books per hour?\$1.50
In the above table, the total cost of producing 9 units of output is \$70.
In the above table, the total variable cost of producing 16 units of output is\$100.
The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is \$200 and workers cost \$10 per hour. The average variable cost of producing 10 baseball hats per hour is \$2.
Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).What is Dustin's long-run average cost if the output is 3,000 copies per day? 3.7 cents per copy
Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4). Dustin's Plant 2 will be economically efficient if the firm produces ________ copies per day. 4,800 copies per day.
Economies to scale refer to the range of output over which the long-run average cost falls as output increases.
When long-run average costs decrease as output increases, there are economies of scale.
When a firm experiences economies of scale, its ________ cost curve slopes ________. long-run average; downward
If a firm is in a perfectly competitive industry, then the demand for its product is perfectly elastic.
Because each perfectly competitive firm sells a product identical to that of the other firms, each firm's output is a perfect substitute for the output of any other firm.
Consider the perfectly competitive firm in the above figure. What will the firm choose to do in the short-run and why? stay in business because the firm's economic loss is less than fixed costs
A perfectly competitive firm's short-run supply curve is the same as its MC curve above the minimum of the AVC curve.
When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner, makes an income equal to his best alternative forgone income.
All economic questions arise because we want more than we can get.
Pete has just decided to go to college to learn how to become a certified public accountant. Pete has made a decision that will increase the nation's human capital.
If the marginal cost of an activity exceeds the marginal benefit, then an alternative action will be selected.
The figure above illustrates Mary's production possibilities frontier. If Mary wants to move from point b to point c, she must give up some of good Y in order to obtain more of good X
A nation can produce at a point outside its PPF never.
A nation can consume at a point outside its PPF when it trades with other nations.
In the above figure, curve b shows the (bycycles)bottles of soda that people are willing to forgo to get another bicycle.
In the above figure, when 2000 bicycles are produced each month, we can see that Both answers A and B are correct.
In 2006, Country X and Country Y had the same production possibilities, illustrated in the figure above. Country X chose to produce at point A, while country Y chose to produce at point B. In 2012, most likely, Country X will be at point such as ________ while Country Y will be at point such as ________. N; Q
An opportunity cost of economic growth is the decrease in production of consumption goods in the present time period.
The tradeoff between current consumption and the production of capital goods also reflects a tradeoff between current consumption and future consumption.
In the figure above, suppose that Mac and Izzie trade and reach point c. Then neither Mac nor Izzie produce outside their production possibilities frontiers.
In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is correct? Brandon has a comparative advantage only in planting.
Refer to the above figure. Mario is self-sufficient and so is Mia. Each produces 6 dishes of pasta and 4 pizzas. Mario and Mia decide to specialize and trade. After they have specialized and traded, compared to the initial situation, Mia's opportunity cost of pasta has ________ and Mario's opportunity cost of a pizza has ________. increased, increased
In goods markets firms sell to households. In factor markets households sell to firms.
The price of a bag of corn chips is \$3, and the price of a bottle of soda is \$1. What is the relative price of a bag of corn chips? 3 bottles of soda
If shoes rise in price, the demand curve for shoes ________ and the quantity of shoes demanded ________. does not shift; decreases
Ham and eggs are complements. If the price of ham rises, the demand for eggs will decrease and the demand curve for eggs will shift leftward.
The price of jet fuel falls. This fall shifts the supply curve of airplane trips rightward.
Blank DVDs and prerecorded DVDs are substitutes in production. An increase in the price of a blank DVD will lead to a decrease in the supply of prerecorded DVDs.
If the price elasticity of demand for peanut butter is 2.4, then peanut butter has an elastic demand.
If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price inelastic, she shouldraise her price because she knows that the percentage decrease in the quantity demanded will be smaller than the percentage increase in price.
An increase in Abigail's income decreases her demand for used cars. For her, used cars are an inferior good.
Duke increased his spending on steak from \$7 to \$11 per week because of a 12 percent salary increase, so his income elasticity of demand for steak is 3.7.
If the supply curve is vertical then supply is perfectly inelastic.
Which of the following goods would best be described as being in perfectly inelastic supply? the original portrait of "Whistler's Mother"
In the above figure, consumer surplus is measured in (icecream)dollars.
Suppose that Hot Dog House produces hot dogs for \$0.25 each. If the Hot Dog House can sell hot dogs for \$0.50 each, then definitely the Hot Dog House can earn a producer surplus.
The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________. \$60 an hour
In the above figure, if the market price rises from \$100 to \$125 per ton of wheat, then producer surplus increases.
Total surplus is defined as consumer surplus + producer surplus.
Overproduction compared to the efficient amount implies that for the last unit produced marginal social cost exceeds marginal social benefit.
A rent ceiling set below the equilibrium price restricts the quantity supplied but not the quantity demanded.
In the above figure, a rent ceiling of \$300 per month would result in a shortage of 7000 units.
In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of \$3 per hour will have no effect on the market.
In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of \$6 per hour will initially decrease employment from 30 to 20 million hours per year
Consider the market for purple magic markers. The demand for purple magic markers is perfectly elastic and the supply is upward sloping. If sellers of purple magic markers are taxed \$1 per marker, how will the tax be divided between the buyer and seller? The sellers will pay the entire tax.
Of the \$3 per pizza tax illustrated in the above figure, the All of the above answers are correct.
If economic profits are equal to zero then normal profits are being earned
Under oligopoly, there are ________ firms selling products that are ________. a few; either identical or different
The long run is distinguished from the short run because only in the long run the quantities of all resources can be varied.
The short run . Both answers B and C are correct.
A firm's total product curve showshow the amount of output changes when the quantity of labor changes.
Using the data in the above table, if the firm employs 3 workers, total product (measured in units per day) and average product and marginal product of the third worker (measured in units per worker) are 19, 6 1/3, and 7 respectively.
Which of the following shifts the AVC curve upward at Barney's Bagel Bakery? an increase in the hourly wage that Barney pays his workers
The above (incomplete) table provides information about the relationships between output and various cost measures. The total cost (TC) of producing 9 units of output is \$190.
A firm is operating in its range of economies of scale and is on both its LRAC curve and its short-run ATC curve. At that level of output, the slope of its LRAC curve is negative and the slope of its ATC curve is negative.
In the above figure, the long-run average cost curve exhibits economies of scale between 5 and 10 units per hour.
Marginal revenue is equal to the change in total revenue divided by the change in quantity sold.
In the above figure, if the milk industry is perfectly competitive, then the firm's marginal revenue curve is represented bycurve H.
The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E.B
Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should decrease her output.
In the above figure, at a price of \$8, a perfectly competitive firm produces ________ and it ________.some output; earns a normal profit
The figure above shows the marginal revenue and costs of a perfectly competitive firm. When the firm produces 170 unitsmarginal revenue equals marginal cost.
In the short run, perfectly competitive firms ________ but in the long run, perfectly competitive firms make ________. can incur economic losses; zero economic profit
Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's profit maximizing level of output? 48 pages per hour
In the long-run equilibrium, perfectly competitive firms produce where average total cost is minimized.
In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost. lowest; lowest
The following are key features of a monopoly EXCEPT the monopoly has severe diseconomies of scale.
Which of the following is NOT a legal barrier to entry? innovation
A natural monopoly is an industry in which economies of scale exist at the level of output where the market demand curve intersects the long-run average cost curve.
Given the market demand and cost data in the above figure, the existence of two firms equal sized firms producing a total of 8 million cubic feet of natural gas means that the long-run average cost of producing natural gas is 20 cents per cubic foot.
Given the market demand and cost data in the above figure, the existence of a monopoly firm producing 8 million cubic feet of natural gas makes it possible to produce natural gas at a long-run average cost of 10 cents per cubic foot
A monopolist maximizes its profit by producing the amount of output where . marginal revenue equals marginal cost.
Which of the following is a characteristic of monopoly in the long run? Economic profits can exist.
The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night? \$111
For the unregulated, single-price monopoly shown in the figure above, when its profit is maximized, output will be 4 units per year and the price will be \$6.
The unregulated, single-price monopoly shown in the figure above will produce where its demand is elastic.
The unregulated, single-price monopoly shown in the figure above has a total economic profit of \$8.
If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will ________ its price and ________ its output. lower; increase
Which of the following is true for BOTH monopoly and perfect competition? Profits are maximized by producing at the level of output where marginal revenue is equal to marginal cost.
A key difference between a monopoly and a perfectly competitive firm is that the monopolist has a marginal revenue curve that lies below its demand curve.
One difference between perfectly competitive markets and single-price monopoly markets is that marginal revenue equals price for perfectly competitive firms, but not for single-price monopolists.
For a natural monopoly, fixed costs are a large percentage of total costs.
Under a marginal cost pricing rule, a regulated natural monopoly incurs an economic loss and there is no deadweight loss.
If a natural monopoly has an average cost pricing rule imposed, the rule will reduce the consumer surplus and generate a deadweight loss when compared to a marginal cost pricing rule