A Monopoly Firm Operates with Declining Marginal Cost

question 88

Multiple Choice

A monopoly firm operates with declining marginal cost.If regulators impose marginal cost pricing, the market will

• A)remain a monopoly but behave like a perfectly competitive industry.
• B)become perfectly competitive.
• C)be entered by additional firms but will not necessarily become perfectly competitive.
• D)be exited by the existing firm if the regulators will let the firm leave the market.

---

Definitions:

Accounts Receivable

Accounts receivable represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Bad Debt Expense

An expense account reflecting accounts receivable that a company does not expect to collect and is considered a loss.

Allowance for Doubtful Accounts

An accounting provision made for accounts receivable that may not be collectable.

Accounts Receivable

Funds that a company's clients have not yet paid for products or services that have already been provided to them.