Since Natural Monopolies Have a Declining Average-Cost Curve,what Effect Would

question 82

Multiple Choice

Since natural monopolies have a declining average-cost curve,what effect would regulating natural monopolies by setting price equal to marginal cost have

• A)It would cause the monopolist to operate at a loss.
• B)It would result in a less than optimal total surplus.
• C)It would maximize producer surplus.
• D)It would encourage research in order to recoup lost profits.

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Definitions:

Transaction

An agreement or communication carried out between two or more parties that results in the exchange of value, such as the purchase or sale of goods or services.

Posting Reference Columns

Columns in a journal entry that help in transferring information to, and tracking from, the corresponding ledger accounts for audit trail purposes.

Ledger

A comprehensive collection of a company’s final financial accounts, including assets, liabilities, equity, revenue, and expenses.

Journal

A detailed record where all financial transactions of a business are initially recorded, listed in chronological order.