Answer the Following

question 23

Essay

Answer the following:
a)Define and illustrate graphically average-cost pricing and marginal-cost pricing.
b)What are the problems faced in regulating natural monopolies?

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Definitions:

Free Entry

A market condition where firms can freely enter or exit the market without facing significant barriers to entry or exit.

Rent-a-Wreck Industry

The business sector that specializes in renting out older, often pre-owned vehicles at reduced rates compared to standard rental services.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, which leads to firms being price takers.