If a Regulatory Agency Sets the Price Equal to Marginal

question 36

Multiple Choice

If a regulatory agency sets the price equal to marginal cost for a natural monopoly, the

• A) government might have to provide a subsidy to the firm to keep it in business.
• B) firm makes zero economic profit.
• C) firm makes an economic profit, though not the maximum economic profit.
• D) firm makes the maximum economic profit.
• E) price is the same as the unregulated monopoly price.

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Definitions:

Financial Gains

Profits or monetary benefits received from investments, operations, or other financial activities.

Fresh Ideas

New and innovative thoughts or approaches to problems or challenges.

Collective Efficacy

The shared belief in the ability of a group to execute actions and achieve objectives effectively.

Team Performance

A measure of how effectively a team achieves its goals and objectives, often influenced by factors such as communication, coordination, and leadership.