The Figure Below Shows Revenue and Cost Curves of a Natural

question 57

Multiple Choice

The figure below shows revenue and cost curves of a natural monopoly firm.Figure 14.1
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In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-When regulating a natural monopoly, government officials face a dilemma that:

• A)the efficient price may not allow the firm to break even.
• B)the efficient price may lead to an inefficiently high level of output.
• C)the efficient price leads to an output level that is too low.
• D)the efficient price may force the firm to shut-down.
• E)long-run average costs are constantly increasing.

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Definitions:

Underlying Goal

The fundamental objective or purpose that drives an action, strategy, or mission within an organization or individual's efforts.

Management Rights

The capacity and authority vested in the management to run an organization, make decisions regarding operational activities, and implement policies without needing approval from the workforce or unions.

Collective Agreement

A written contract negotiated between an employer and a union representing the employees, outlining terms of employment, wages, and workplace policies and procedures.

Business

The practice of making one's living by engaging in trade, services, and goods, often structured as companies or enterprises.