Consider a Natural Monopoly That Is Producing an Output Level

question 59

Multiple Choice

Consider a natural monopoly that is producing an output level such that it is experiencing decreasing returns to scale.If government policy requires the firm to set price equal to marginal cost,

• A)the outcome will be allocatively inefficient and the firm will be incurring losses.
• B)the outcome will be allocatively efficient and the firm will be earning zero profits.
• C)the outcome will be allocatively efficient and the firm will be earning profits.
• D)the outcome will be allocatively efficient and the firm will be incurring losses.
• E)the outcome will be allocatively inefficient and the firm will be earning profits.

---

Definitions:

Authoritarian

A child-rearing style in which parents demand submission and obedience.

Monthly Allowance

A fixed amount of money given regularly, often on a monthly basis, for expenses or personal use, typically provided to children or dependents.

Physical Discipline

A method of correcting or controlling behavior by applying a physical force or action, typically involving spanking or hitting.

Warm Parents

Parents who exhibit affection, responsiveness, and supportive behaviors towards their children, fostering a positive and secure attachment.