Consider a Natural Monopoly That Is Producing an Output Level

question 112

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

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Definitions:

Heightened Surveillance

Increased and intensified scrutiny or observation of individuals or groups, often based on certain characteristics or behaviors.

Crime Drop

Refers to a significant reduction in the rate of crime within a specific geographical area or over a period of time.

Prison Boom

The rapid expansion of the prison population, mainly in the United States, starting in the late 20th century, due to changes in law and policy.

Neoliberalism

An economic and political ideology that favors free-market capitalism, deregulation, and reduction in government spending on social services, criticized for exacerbating inequality and environmental degradation.