The Figure Below Shows Revenue and Cost Curves of a Natural

question 66

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
-If social regulation increases a firm's fixed and variable costs:

• A)then both marginal cost and average total cost will increase, and the firm will produce more.
• B)then both marginal cost and average total cost will increase, and the firm will produce less.
• C)then both marginal cost and average total cost will decrease, and profits will increase.
• D)then marginal cost will increase, average total cost will be constant, and price will decline.
• E)then both price and quantity produced will fall.

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Definitions:

Basic Earnings Per Share

A measure of the amount of a company's profit that can be allocated to one share of its common stock, excluding any complex financial structures.

Payout Ratios

The percentage of earnings paid to shareholders in the form of dividends.

Capital Appreciation

An increase in the value of an asset or investment over time, not including the earnings from dividends or interest.