An Average Cost Pricing Rule for a Natural Monopoly Sets

question 398

Multiple Choice

An average cost pricing rule for a natural monopoly sets the price ________ the marginal cost, thereby ________ a deadweight loss.

• A) below; avoiding
• B) below; creating
• C) above; avoiding
• D) above; creating

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Definitions:

Credit Memorandum

A document issued by a seller to a buyer, reducing the amount owed by the buyer due to returns or allowances.