When a Government Owns a Natural Monopoly and Avoids Subsidies

question 63

Multiple Choice

When a government owns a natural monopoly and avoids subsidies, it:

• A)creates deadweight loss.
• B)sets the price above marginal cost.
• C)recognizes that setting price equal to marginal cost would cause the enterprise to incur losses.
• D)All of these are true.

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Definitions:

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