The Problem with a Regulatory Authority Forcing a Natural Monopoly

question 45

Multiple Choice

The problem with a regulatory authority forcing a natural monopoly to use marginal cost pricing is that the natural monopoly would

• A)not be capable of supplying all the quantity that buyers would take off the market.
• B)only break even.
• C)earn above-normal profits.
• D)operate at a loss.
• E)price too high.

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Definitions:

Work Time

Periods during which an employee is formally engaged in their work duties and responsibilities.

Violations

Acts that break the terms of a law, contract, or agreement.

Punishable

Describing actions or offenses that can lead to legal penalties or sanctions according to the law.

Codified

The transformation of laws or regulations into a systematic code.