If a Regulatory Commission Wants to Establish a Socially Optimal

question 113

Multiple Choice

If a regulatory commission wants to establish a socially optimal price for a natural monopoly, it should select a price

• A) at which the marginal cost curve intersects the demand curve.
• B) at which marginal revenue is zero.
• C) at which the average total cost curve intersects the demand curve.
• D) that corresponds with the equality of marginal cost and marginal revenue.

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Definitions:

Freight Costs

Expenses associated with transporting goods from one place to another, which can be paid by the shipper or the receiver.

Net 45

A payment term indicating that the full payment is due 45 days from the invoice date.

Credit Terms

The conditions under which a seller extends credit to a buyer, detailing the repayment time frame, interest rate, and penalties for late payment.

Cost of Goods Sold

The direct expenses related to the manufacture of the goods a company sells, encompassing both costs of materials and labor.