Suppose the Local Government Is Considering Using Marginal Cost Pricing

question 162

Multiple Choice

Suppose the local government is considering using marginal cost pricing to set rates for a cable TV company.Which of the following arguments supports marginal cost pricing?

• A)Marginal cost pricing gives the monopoly an economic profit and a reason to stay in business.
• B)Marginal cost pricing gives the firm a normal economic profit and a reason to stay in business.
• C)Marginal cost pricing results in allocative efficiency.
• D)Unlike firms adopting average cost pricing, firms using marginal cost pricing do not require subsidies, which can be costly.
• E)Unlike average cost pricing, marginal cost pricing enables monopolies to stay in business in the long run.

---

Definitions:

Obsessive-Compulsive Personality Disorder

A personality disorder characterized by a pervasive pattern of preoccupation with orderliness, perfectionism, and control.

Developmental Disabilities

A diverse group of chronic conditions due to impaired physical, learning, language, or behavior development starting before adulthood.

Physical Neglect

The failure to provide necessary care, such as food, clothing, shelter, or medical attention, resulting in harm or risk of harm.

DSM-5 Criteria

Diagnostic standards and criteria for mental disorders used in the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition.