Which of the Following Is True of a Natural Monopoly

question 168

Multiple Choice

Which of the following is true of a natural monopoly?

• A)If regulated, the firm will have a higher level of output than an unregulated firm, whether the regulation is based on average cost, marginal cost, or normal profit.
• B)If regulated, the firm will have a lower level of output than an unregulated firm, whether the regulation is based on average cost, marginal cost, or normal profit.
• C)If regulated, the firm that is only allowed a normal profit will be allowed to charge a price in excess of its average cost.
• D)If regulated, the firm that is only allowed a normal profit will be allowed to produce more than a firm that must set a price equal to its marginal cost.
• E)If regulated, the firm that is only allowed a normal profit will be allowed to produce more than a firm that must set a price equal to its average cost.

Interpret utility schedules and identify instances of diminishing marginal utility.

Calculate total utility given marginal utility data.

Analyze consumer behavior and utility maximization principles.

Explain the relationship between total utility, marginal utility, and consumer choice.

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