Which of the Following Explains Why the Marginal Cost Pricing

question 56

Multiple Choice

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

• A) The ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC.
• B) The demand curve is downward sloping, therefore price falls as quantity increases.
• C) The MC is constant and equal to price.
• D) Because output is determined by setting MC equal to the price, consumer surplus is maximized.
• E) The firm's MR is always less than its price.

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Definitions:

Irreversibility

A cognitive limitation in young children's thinking, where they are unable to understand that an action can be done and undone.

Internalized Sets

Concepts, beliefs, or ways of thinking that have been fully absorbed into one's mindset and influence behavior and decision-making.

Operations

Mental actions that are reversible and allow children to do mentally what they previously did physically, a key concept in cognitive development theory.

Schemas

Cognitive structures that organize knowledge and guide information processing, based on themes or subjects.