When a Regulator Allows a Monopolist to Set Its Price

question 230

Multiple Choice

When a regulator allows a monopolist to set its price equal to long-run average cost, the regulator is practicing

• A) marginal cost pricing.
• B) operating cost pricing.
• C) average cost pricing.
• D) optimal cost pricing.

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Definitions:

Resalable

Resalable refers to goods or products that can be sold again, either in their original condition or after being refurbished or repurposed.

Principle of Consistency

An accounting principle that necessitates the use of the same accounting methods and practices from one period to the next for comparability.

Inventory Valuation Method

A system or approach used to calculate the ending inventory's cost and determine the cost of goods sold, affecting the company's profitability and inventory balance.

Fiscal Period

A specific time period for which a business reports financial performance and position, typically a year or quarter.