Which of the Following Statements Is (Are) TRUE

question 65

Multiple Choice

Which of the following statements is (are) TRUE?
I. If the government regulates the price of a natural monopoly such that price equals marginal cost, the natural monopolist may earn a negative profit.
II. Government regulation of natural monopolies is straightforward because regulators can precisely estimate the demand and cost conditions of regulated firms.
III. Government regulation based on production costs makes firms less likely to reduce costs if lower costs lead to lower regulated prices.

• A) I, II, and III
• B) II and III
• C) I and III
• D) I

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Definitions:

Aggression

Behavior intended to harm or intimidate others.

Moderately Consistent

Showing a level of regularity or predictability in actions or behavior, but not to an absolute degree.

Humanism

A philosophical stance that emphasizes the value and agency of humans, individually and collectively, and generally prefers critical thinking and evidence over acceptance of dogma or superstition.

Unique Human Qualities

Distinctive attributes or characteristics that differentiate humans from other species, such as self-awareness, creativity, and the capacity for complex language.