If Average- Cost Pricing Is Imposed on a Falling- Cost

question 8

Multiple Choice

If average- cost pricing is imposed on a falling- cost natural monopoly,the result will be

• A)losses and exit from the industry in the long run.
• B)economic losses.
• C)exit from the industry in the short run.
• D)zero economic profit.
• E)economic profits.

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Definitions:

Inch

A unit of length in the British imperial and United States customary systems, equal to 1/12 foot or 2.54 centimeters.

Metric System

A decimal system of measurement based on meters, liters, and grams as units of length, volume, and weight.

Liter

A metric unit of volume equal to one cubic decimeter or 1000 cubic centimeters, commonly used to measure liquids.

Volume

The amount of space that a substance or object occupies, or that is enclosed within a container.