Which of the Following Is a Problem That Arises When

question 188

Multiple Choice

Which of the following is a problem that arises when regulations force "natural monopolies," like electric utilities, to charge a price that is equal to their marginal cost (MC) ?

• A) This price will force the firms out of business in the long run.
• B) The firms have an incentive to pad their fixed costs.
• C) When price is equal to MC, new firms will enter the industry and drive up the costs of production.
• D) Both b and c are correct.

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Definitions:

France

A country in Western Europe known for its rich history, cultural heritage, culinary excellence, and significant contributions to art, science, and philosophy.

Great Britain

An island in the North Atlantic off the northwest coast of mainland Europe, comprising England, Scotland, and Wales.

Judgment Sampling

A nonprobability method of sampling whereby elements are selected for the sample based on the judgment of the person doing the study.