The Figure Below Shows Revenue and Cost Curves of a Natural

question 59

Multiple Choice

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1 In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-Refer to Figure 12.1.Identify the fair-rate-of-return price.

• A)P₅
• B)P₂
• C)P₄
• D)P₁
• E)P₃

---

Definitions:

Motivation

The internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job or subject.

Suboptimal Decision

A choice made that is not the best or most effective among the alternatives considered.

Transfer Pricing

The setting of prices for transactions between affiliated companies within the same multinational group, which can impact where profits are reported.

Market-Based

Pricing or decision-making strategies that are influenced primarily by market conditions and customer demand rather than internal cost considerations.