If a Natural Monopolist Were Forced to Set Price Equal

question 73

Multiple Choice

If a natural monopolist were forced to set price equal to average cost, it would:

• A) earn a normal profit.
• B) suffer losses.
• C) earn excessive profit.
• D) be forced to produce more than the socially optimal level of output.

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Definitions:

Simple Structure

An organizational form characterized by low complexity, few layers of management, and a loose division of labor.

Professional Bureaucracy

An organizational structure characterized by highly specialized jobs and a strong reliance on trained professionals to make decisions.

Machine Bureaucracy

An organizational structure characterized by a high degree of formalization and centralized decision-making.

Adhocracy

An organizational structure that is flexible and adaptable, characterized by a lack of formal hierarchy and the ability to quickly respond to changes.