The Figure Above Shows a Natural Monopoly Regulated Using a Marginal

question 177

Multiple Choice

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above,an

• A) efficient output results, but the firm incurs a loss per household which must be subsidized in some way.
• B) inefficient output results, though the firm covers its costs.
• C) an efficient output results, though marginal costs exceed average total costs.
• D) an inefficient output results, because the firm cannot cover its costs.
• E) an efficient output results, because consumer surplus is maximized.

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Definitions:

Process-Oriented

An approach focusing on the processes and operations within an organization, aiming at improving efficiency and effectiveness.

Work Cells

An arrangement in a manufacturing environment where all the necessary machines and equipment are placed close together to manufacture a product, improving coordination and efficiency.

Level Material Use

A strategy in production planning that aims for a constant rate of material use, minimizing fluctuations in inventory levels.

Repetitive Manufacturing

A production method where the same products or components are produced in a continuous flow or on a repetitive basis.