Which of the Following Statements Is False

question 23

Multiple Choice

Which of the following statements is false?

• A)Average-cost pricing usually refers to setting a price for a natural monopoly firm that is equal to its ATC, thus guaranteeing the firm a normal profit.
• B)An economist thinks that there are both benefits and costs to most (if not all) types of regulation.
• C)The public choice theory of regulation holds that regulators are seeking to do, and will do through regulation, what is in the best interest of the society at large.
• D)One of the unintended effects of profit regulation (in the form of guaranteeing the natural monopoly firm that it will always earn normal profit-nothing more and nothing less) is that the natural monopoly has no incentive to keep its costs down.

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Definitions:

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Tangible Assets

Tangible assets are physical assets that have a finite monetary value and physical presence, such as machinery, buildings, and land.

Retained Earnings

Retained earnings are the portion of a company's profits that is kept or retained and not paid out as dividends to shareholders but reinvested in its core business or to pay debt.

Shareholders'

Individuals or entities that own one or more shares of stock in a public or private corporation, granting them certain rights such as voting on corporate matters.