If the Marginal Cost Pricing Rule Is Used to Regulate

question 190

Multiple Choice

If the marginal cost pricing rule is used to regulate a natural monopolist, the monopolist

• A) earns an economic profit.
• B) earns a normal profit.
• C) sustains an economic loss.
• D) earns a monopoly profit.

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Definitions:

Regulation

Rules or directives made and maintained by an authority to regulate behavior, usually in the form of laws or regulations.

High Profits

Significant financial gains exceeding the average or expected profit margins in a business's operations.

Regulated Industries

Industries that are subject to governmental oversight and control to ensure fairness, safety, and adherence to certain standards or regulations.

Social Regulation

Refers to government-imposed restrictions that aim to protect public health, safety, and well-being, as well as to ensure fair competition and consumer protection.