A Natural Monopoly That Is Regulated to Set Price Equal

question 143

Multiple Choice

A natural monopoly that is regulated to set price equal to marginal cost

• A) makes an economic profit.
• B) makes zero economic profit.
• C) incurs an economic loss.
• D) could make an economic loss, an economic profit, or zero economic profit.
• E) makes zero normal profit.

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Definitions:

Monopolistic Competition

A market structure where many companies sell products or services that are similar, but not identical, allowing for significant control over pricing.

Pure Monopoly

A market structure where a single supplier provides a unique product or service with no close substitutes, controlling the entire market.

Oligopoly

A market structure characterized by a small number of firms controlling a large majority of the market share, often leading to limited competition.

Monopolistic Competitive

A market structure characterized by many firms selling products that are substitutes but differentiated from one another, leading to non-price competition.