If the Regulation of a Monopoly Results in a Price

question 25

Essay

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:
A.the firm can still make an economic profit.
B.the firm will earn only a zero economic profit.
C.efficiency in allocation will be less.
D.the firm will require subsidization or it will go out of business.

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Definitions:

Broad

Wide in extent or scope; encompassing a large area or range.

Comprehensive

Thorough and complete in coverage or scope, addressing all necessary aspects of a topic or issue.

Longer-Term

Pertaining to an extended period, typically beyond five years, used especially in planning and forecasting future goals and strategies.

Control

The process of managing and directing activities in an organization to ensure that its goals are achieved efficiently and effectively.