If We Compare Regulating a Natural Monopoly Using a Marginal

question 69

Multiple Choice

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule, we see that output is

• A) greater with marginal cost pricing, but average cost pricing allows for costs to be covered.
• B) the same under both cases, but the profit is greater with average cost pricing.
• C) the same but profits are greater with marginal cost pricing.
• D) greater with marginal cost pricing, and the firm's profit is larger with marginal cost pricing.
• E) greater under average cost pricing, but profits are greater with marginal cost pricing.

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Definitions:

Essential Elements

Fundamental components or aspects that are necessary for something to function or be understood.

Op Art

An artistic movement of the 1960s in which painters sought to produce optical illusions of motion and depth using only geometric forms on two-dimensional surfaces.

Pointillist Manner

A painting technique in which small, distinct dots of color are applied in patterns to form an image, associated with Post-Impressionism.

Bridget Riley

A British painter known for her work in the op-art movement, creating optical illusions and dynamic visual effects through abstract patterns.