Use the Information Below to Answer the Following Questions

question 69

Multiple Choice

Use the information below to answer the following questions.
Fact 13.5.1
Cascade Springs Inc. is a natural monopoly that bottles water from a spring high in the Rocky Mountains. The total fixed cost it incurs is $80,000, and its marginal cost is 10 cents a bottle. The demand curve for Cascade Springs bottled water is shown in the following figure:

Figure 13.5.1
-Refer to Figure 13.5.1. Suppose the firm is regulated by the government that imposes marginal cost pricing. The price of a bottle of water is

• A)$0.
• B)$0.50.
• C)$0.30.
• D)$0.10.
• E)$0.20.

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Definitions:

Excise Tax

A type of indirect tax imposed on specific goods, such as tobacco and alcohol, often with the aim of reducing their consumption or generating revenue.

Public Golf Courses

Golf facilities that are owned by a government entity and are open to the public, typically requiring payment of a fee for use.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases, leading to a higher burden on lower-income individuals.

High-Income

A category used to describe individuals or households that earn significantly more money than the average for their area or country.