1. Value-of-service pricing for surface freight transportation entails ________.

a. charging higher rates for faster service

b. charging higher rates for shipping higher-valued commodities

c. charging higher rates for longer distances

d. charging different rates in different geographic regions

2. Why might regulated firms in the railroad industry have petitioned for lower rates?

a. the demand for railroad services was inelastic

b. an alternate transportation mode emerged as a viable substitute for rail shipping

c. the exit of unprofitable competitors necessitated lower rates

d. railroads had high fixed costs and low operating costs

3. Many economists believe that railroad interests captured the Interstate Commerce Commission (ICC), and the regulator effectively served to enforce collusive pricing agreements among competing railroads. What would this theory suggest would happen if the industry deregulated prices and removed entry restrictions?

a. Prices would fall because deregulation would allow for entry and price competition among firms.

b. Prices would rise because entering firms would have higher break-even costs than incumbent firms.

c. Prices would rise because unprofitable firms would exit the industry.

d. Prices would rise because firms would attempt to increase profits in the deregulated market.