Whether in a Natural Monopoly or a Simple Monopoly, the Regulated

question 35

Multiple Choice

Whether in a natural monopoly or a simple monopoly, the regulated price of electricity is theoretically supposed to be set where

• A)marginal cost equals zero.
• B)there is no economic profit.
• C)there is no accounting profit.
• D)marginal revenue is zero.

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Definitions:

Markets For Factors

The arena in which services of the factors of production (such as labor, capital, and land) are bought and sold.

Economic Models

Economic models are simplified representations of the complex realities of economic activities to predict future economic behavior and outcomes.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing among multiple options.

Opportunity Cost

The cost of foregone alternatives when one option is chosen over another.