Compared to the Profit- Maximising Equilibrium of a Natural Monopoly

question 22

Multiple Choice

Compared to the profit- maximising equilibrium of a natural monopoly, a price cap regulation _______ Price and _______ output.

• A) lowers; decreases
• B) raises; decreases
• C) raises; increases
• D) lowers; increases

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Definitions:

Trucks

Large heavy-duty vehicles designed for transporting goods and materials over long distances.

Cars

Motor vehicles with four wheels designed primarily for passenger transportation on roads.

Opportunity Cost

The price paid for not selecting the alternative that is second-best when a choice is made.

Car

A vehicle on wheels intended for moving people, typically driven by either an internal combustion engine or an electric motor.