An Unregulated Natural Monopoly Is Most Likely to

question 121

Multiple Choice

An unregulated natural monopoly is most likely to

• A)Earn an economic profit.
• B)Produce where marginal cost equals price.
• C)Charge a lower price than if the same product were produced in a competitive market because of the monopolist's greater technical efficiency.
• D)Take advantage of the concept of marginal cost pricing.

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Definitions:

Temporal Discounting

The tendency to value immediate rewards more highly than future rewards.

Preference

An individual's choice or predilection towards certain ideas, objects, or outcomes over others.

Error Management Theory

A theory suggesting that humans and other animals have evolved biases in judgement and decision-making processes to avoid more costly errors.

Omission Bias

The tendency to take whatever course of action does not require you to do anything (also called the default option).