-Refer to the Above Figure $\mathrm { P } _ { 5 }$

question 152

Multiple Choice

-Refer to the above figure.If the government uses rate-of-return regulation for the natural monopolist,the firm will charge price

• A) \(\mathrm { P } _ { 5 }\) and sell \(\mathrm { Q } _ { 1 }\) units.
• B) \(P _ { 2 }\) and sell \(\mathrm { Q } _ { 1 }\) units.
• C) \(\mathrm { P } _ { 3 }\) and sell \(\mathrm { Q } _ { 3 }\) units.
• D) \(P _ { 1 }\) and sell \(\mathrm { Q } _ { 4 }\) units.

---

Definitions:

Annual Profit

Annual profit refers to the total profit a business earns over the course of a fiscal year, accounting for all revenues minus expenses during that period.

Variable Costs

Costs that vary directly with the level of production or service activity, such as materials and labor.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and loan payments.

Total Cost

The sum of all expenses incurred by a firm in producing goods or services, including both fixed and variable costs.