If a Regulatory Board Wanted to Make Sure That a Natural

question 8

Multiple Choice

If a regulatory board wanted to make sure that a natural monopoly earned a normal rate of return,it should set price which is equal to:

• A) marginal cost.
• B) average fixed cost.
• C) average variable cost.
• D) average total cost.

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Definitions:

Sample Mean

The average value of a sample set of data, calculated by summing all observations and dividing by the number of observations.

Population Mean

The average of all the values in a population; it is a parameter that represents the central point of a population distribution.

Unbiased Estimator

A statistical estimator that, on average, accurately reflects the parameter it estimates, without systematic error.

Sampling Distribution

The likelihood distribution of a statistic derived from a random sample.