As a Policy Option for Regulating Natural Monopoly, Marginal Cost

question 46

Multiple Choice

As a policy option for regulating natural monopoly, marginal cost pricing is desirable because

• A) consumers pay the lowest possible price that will generate sufficient revenue to cover the costs of the natural monopolist.
• B) allocative efficiency is achieved.
• C) price is set equal to the minimum value of long-run average cost.
• D) all of the above.

---

Definitions:

NonConforming Goods

Products delivered under a contract that fail to meet the specifications or quality standards agreed upon by the buyer and seller.

Price Allowance

Price Allowance is a discount or reduction in price, usually granted by a seller to a buyer, to account for damage, defects, or promotions.

Tender

An offer of money or service in payment or performance of an obligation.

Good Faith

Acting with honesty and integrity without the intention of deceiving or defrauding others, often in contractual or negotiation contexts.