Which of the Following Is a Criticism of Average-Cost Pricing

question 23

Multiple Choice

Which of the following is a criticism of average-cost pricing as a regulatory response to a natural monopoly?

• A)With average-cost pricing,the output produced is lower than the efficient level of output.
• B)Firms that practice average-cost pricing suffer persistent losses.
• C)Imperfect information about the firm's costs reduces the effectiveness of average-cost pricing.
• D)Average-cost pricing reduces the firm's economic profit but also reduces consumer welfare.
• E)With average-cost pricing,the price in the market is lower than the efficient price.

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Definitions:

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