Under a Marginal Cost Pricing Rule,a Regulated Natural Monopoly

question 64

Multiple Choice

Under a marginal cost pricing rule,a regulated natural monopoly

• A)makes an economic profit and a deadweight loss arises.
• B)makes an economic profit with no deadweight loss.
• C)incurs an economic loss with no deadweight loss.
• D)incurs an economic loss and a deadweight loss arises.
• E)breaks even.

---

Definitions:

Simple Interest

Simple interest is a method of calculating the interest charge on a loan or investment based on the original principal amount and not on accumulated interest.

Discount

A reduction applied to the normal cost of goods or services, or in finance, the process of determining the present value of future cash flows by applying a discount rate.

Compound Interest

Interest that accrues on the principal amount as well as on the accrued interest from earlier periods, for either a deposit or a loan.

Simple Interest Rate

The percentage of interest paid on the original principal amount of a loan or investment, not compounding over time.