The Following Figure Shows the Average Cost [AC],marginal Cost [MC],and

question 46

Multiple Choice

The following figure shows the average cost [AC],marginal cost [MC],and demand [D] curves for a natural monopoly;Qi denotes quantity and Pi denotes price.
Figure 15-3
-Refer to Figure 15-3.If the firm practices marginal-cost pricing,the equilibrium price would be _____.

• A)P₁
• B)P₂
• C)P₃
• D)P₄

---

Definitions:

Fixed Component

In cost accounting, this refers to costs that do not change with the level of production or sales, such as rent and salaries.

Variable Overhead Efficiency

Variable overhead efficiency refers to the effectiveness with which a company manages its variable manufacturing overhead costs in relation to its production activities.

Rate Variance

The difference between the expected or standard cost and the actual cost incurred for a particular expense, often analyzed in budgeting and cost management.

Budget Variance

The difference between the budgeted or planned amount of expense or revenue and the actual amount incurred or received.