Consider a Regulated Natural Monopoly,such as an Electricity Distribution Company,that

question 107

Multiple Choice

Consider a regulated natural monopoly,such as an electricity distribution company,that faces falling long-run average costs.If it is forced to price its output at average cost it will provide

• A)less output than what is socially optimal.
• B)more output than what is socially optimal.
• C)the socially optimal amount of output.
• D)more output than can be absorbed by the market.
• E)so little output that there will be a shortage.

---

Definitions:

Right Of First Refusal

A contractual right that gives its holder the option to enter a business transaction with the owner of something, before the owner is entitled to enter into that transaction with a third party.

Anticipatory Repudiation

A declaration by one party to a contract of their intention not to fulfill their future obligations as agreed.

Dissolution

The first stage in the termination of a partnership.

Liquidation

The process in which a debtor turns over all assets to a trustee.