If a Natural Monopoly Does Not Inflate Its Costs, the Output

question 339

Multiple Choice

If a natural monopoly does not inflate its costs, the output it produces is the smallest when the monopoly is

• A) left unregulated.
• B) regulated according to an average cost pricing rule.
• C) regulated according to a marginal cost pricing rule.
• D) regulated to maximize total surplus.

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Definitions:

Absolute Power

A condition of unchecked and total control or authority, often exercised by a leader or government without limitations or opposition.

Referent Power

A form of influence based on the leader’s likability and the followers’ desire to identify with or emulate them.

Legitimate Power

Power that is recognized and accepted by individuals due to the position or role of the person holding it.

Achievement Of Organizational Goals

The successful fulfillment or reaching of objectives set by an organization through collective efforts and strategies.