Because Natural Monopolies Have a Declining Average Cost Curve, Regulating

question 281

Multiple Choice

Because natural monopolies have a declining average cost curve, regulating natural monopolies by setting price equal to marginal cost would

• A)cause the monopolist to operate at a loss.
• B)result in a less than optimal total surplus.
• C)maximize producer surplus.
• D)result in higher profits for the monopoly.

---

Definitions:

Age

The length of time that a person has lived or a thing has existed.

Tongue Blade

A tool used in medical examinations to depress the tongue and allow for a better view of the throat and mouth.

Assessment

The systematic process of gathering and interpreting information to make decisions or solve problems.

Throat

The anterior part of the neck, starting from the mouth and nasal cavity down to the larynx and esophagus, serving as a pathway for food and air.