If a Regulatory Commission Wants to Provide a Natural Monopoly

question 14

Multiple Choice

If a regulatory commission wants to provide a natural monopoly with a fair return, it should establish a price that is equal to

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

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Definitions:

Document of Title

A legal document that provides evidence of ownership of property or goods.

Negotiable Document

A written instrument that promises payment to the holder and is freely transferable.

Identified

Recognized or distinguished as being a particular entity or object.

Tendered

The act of presenting for acceptance; in legal and financial contexts, it often refers to offering payment or delivering goods as part of fulfilling a contract.