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

question 55

Multiple Choice

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

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

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Definitions:

Accuracy

The degree to which a measurement or calculation reflects the true value or correct result.

Precision

The accuracy and specificity with which an action is performed or a measurement is taken.

Think Outside

It refers to the process of thinking beyond conventional boundaries or typical ways of thinking, promoting creativity and innovation.

Fixations

An obsessive interest or feeling that may hinder psychological progress and development.