A Likely Consequence Over Time of an Average-Cost Pricing Policy

question 154

Multiple Choice

A likely consequence over time of an average-cost pricing policy for a natural monopoly is

• A) an increase in the average cost curve.
• B) an increase in profits.
• C) no change in price.
• D) a decrease in the average cost curve.

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Definitions:

Distribution

The process of making a product or service available for use or consumption by a consumer or business user.

Metamarket

A cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries.

Metamediary

A digital intermediary that connects buyers and sellers or provides information and services across multiple industries or sectors online.

Commoditized

When a product becomes indistinguishable from others like it on the market and competes mainly on price.