In Order to Ensure Allocative Efficiency on the Part of a Natural

question 131

True/False

In order to ensure allocative efficiency on the part of a natural monopoly, regulators would set price equal to marginal cost.

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Definitions:

Elastic

A characteristic of demand or supply where the quantity demanded or supplied responds significantly to price changes.

Imperfect Competition

A market structure characterized by a few sellers or buyers, creating an environment where the entities do not have to accept the market price and can influence it instead.

Inefficiency

The situation where resources are not used in the best possible way or when an economy or process could achieve more output without changing input levels.

Linking Pins

Roles or individuals that connect different groups or levels within an organization, facilitating communication and coordination.