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:

Intangible Assets

Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance.

Long-Lived Assets

Assets that are expected to provide economic benefits to a company for a period longer than one year.

Physical Substance

An attribute indicating that an asset has tangible form and can be perceived by the senses.

Copyright

A legal right granting the creator of an original work exclusive rights to its use and distribution, typically for a limited time.