When the Government Regulates the Price in a Monopoly Market

question 110

Multiple Choice

When the government regulates the price in a monopoly market by setting price at the level where demand equals marginal cost:

• A)the monopolist reduces output resulting in a shortage in the market.
• B)the monopolist's marginal revenue curve becomes horizontal over all levels of output.
• C)the monopolist's profits are positive at the new price.
• D)the monopolist produces output at the efficient level.

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