"Rate Averaging" Is Only Possible If

question 60

Multiple Choice

"Rate averaging" is only possible if

• A)the firm is protected from price competition and new entry.
• B)the firm is protected from losses resulting from unsuccessful innovation.
• C)the firm can choose the level of service it wishes to provide.
• D)"cream skimming" is permitted.

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Definitions:

Socially Desirable

Refers to actions or policies that are widely accepted and promoted by society because they are considered beneficial for the majority of its members.

Efficient

An attribute of systems, processes, or devices that use the least amount of inputs to achieve the highest amount of output or desired effect.

MSB

Marginal Social Benefit, referring to the additional benefit to society as a whole from consuming one more unit of a good.

MSC

MSC, or Marginal Social Cost, is the total cost to society of producing one additional unit of a good or service, including both private costs and externalities.