Choose the Statement That Best Describes the Dilemma Facing the Regulator

question 116

Multiple Choice

Choose the statement that best describes the dilemma facing the regulator of a natural monopoly.

• A)Marginal-cost pricing leads to profit or losses; average-cost pricing results in allocative inefficiency.
• B)Marginal-cost pricing will result in allocative inefficiency; average-cost pricing leads to profits or losses.
• C)Marginal-cost pricing will result in productive and allocative inefficiency; average-cost pricing will not.
• D)Both kinds of regulation have the same implications for allocative efficiency.
• E)There is no dilemma.

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Definitions:

Prescribing

The act of authorizing and advising the use of medical treatments or drugs by a licensed healthcare professional.

Diagnosing

The process of identifying a disease or condition by its signs, symptoms, and through the use of diagnostic tests.

Generalizing

The process of applying the findings from a specific instance to broader segments under similar but not identical circumstances.

Complicate

To make something more difficult or complex, often by adding new elements or problems.