In Order to Eliminate the Inefficiency Brought About by a Monopoly

question 38

Multiple Choice

In order to eliminate the inefficiency brought about by a monopoly, the government wants to impose a price ceiling on the monopoly.What is the optimal price to be imposed?

• A)the competitive price.
• B)the competitive price - unless it is below ATC.
• C)the competitive price - unless it is below MR.
• D)the competitive price - unless it is above ATC.

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Definitions:

Incentive Motivation

The idea that the level of motivation is affected by magnitude of reward: The greater the reward magnitude, the higher the motivation to obtain that reward.

Internal Arousal

The physiological and psychological state of being alert and engaged, often as a response to external stimuli or internal thoughts.

Hull's Model

A theoretical framework by Clark Hull that describes behavior as the result of internal drives, habits, and the outcomes of previous actions.