In Regulating a Natural Monopoly, the Price Strategy That Ensures

question 239

Multiple Choice

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

• A)equal to average total cost where it intersects the demand curve.
• B)equal to marginal cost where it intersects the demand curve.
• C)equal to average variable cost where it intersects the demand curve.
• D)corresponding to the demand curve where marginal revenue equals zero.

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Definitions:

VIE Theory

Stands for Valence, Instrumentality, and Expectancy, a psychological theory that explains motivation in terms of an individual's belief in the effectiveness and value of effort towards achieving a goal.

Goal Theory

The concept that setting specific, challenging, and attainable goals can significantly enhance employee performance.

Motivate

The process of providing reasons for people to act in a desired manner.

Difficult Goals

Objectives that are challenging to achieve and require significant effort, motivation, and planning to accomplish.