Economic Efficiency Requires That a Natural Monopoly's Price Be Set

question 30

True/False

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

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Definitions:

Reportable Segment

A distinct business segment of a company that can generate its own revenues and expenses and whose operating results are regularly reviewed by the company's management.

Operating Segment

A component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, including segments with intersegment revenues.

Revenue Test

A criterion used to determine the significance of a segment or component of a business by comparing its revenue to a set percentage of the total revenue of the entire entity.

Total Revenues

The aggregate amount of income generated from normal business operations, including sales of goods and services, before any expenses are deducted.