When an Average Cost Pricing Rule Is Imposed on a Natural

question 86

Multiple Choice

When an average cost pricing rule is imposed on a natural monopoly

• A) total surplus is maximized and the monopoly incurs an economic loss.
• B) the monopoly makes zero economic profit.
• C) the monopoly makes an economic profit.
• D) total surplus is maximized and the monopoly makes an economic profit.

---

Definitions:

Compound Shown

A specific molecular structure or substance that is illustrated or referenced in a particular context or study.

δ-Valerolactone

A sustainable, bio-based compound used as a solvent and potential monomer for polymer production, derived from biomass processing.

Methanol

A simple alcohol with the formula CH3OH, used as a solvent, antifreeze, fuel, and as a precursor to other chemicals.

Catalytic Acid

An acid that speeds up a chemical reaction without being consumed in the process, by providing protons to facilitate the reaction.