One of the Practical Difficulties in Regulating a Natural Monopoly

question 59

Multiple Choice

One of the practical difficulties in regulating a natural monopoly using average-cost pricing is:

• A)that the average-cost pricing rule leads to losses which must be subsidized.
• B)that the price ceiling from average-cost pricing is likely to result in shortages.
• C)that the monopoly has no incentive to minimize costs.
• D)it will result in a surplus in the market leading to a drastic fall in the price.

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Definitions:

First Generation

Often refers to the first members of a family to migrate to a new country, or the first to be born in that country to immigrant parents.

Second Generation

Individuals born in a country to immigrant parents, often facing unique cultural, social, and identity challenges related to their family's country of origin and the country of their birth.

Criminalization

The process by which behaviors and individuals are transformed into crime and criminals by making such behaviors illegal and subject to penal sanctions.

Punitive Social Control

The imposition of penalties or punishment by society or its institutions to enforce conformity and discourage deviance.