When a Regulator Allows a Monopolist to Set Its Price

question 230

Multiple Choice

When a regulator allows a monopolist to set its price equal to long-run average cost, the regulator is practicing

• A) marginal cost pricing.
• B) operating cost pricing.
• C) average cost pricing.
• D) optimal cost pricing.

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Definitions:

Over The Counter

A decentralized market where securities are traded directly between parties without the supervision of an exchange.

Bond Dealers

Firms or individuals that trade in bonds, acting as intermediaries between buyers and sellers and often holding an inventory of bonds to facilitate transactions.

Refunding

In finance, refunding refers to the process where an entity replaces an existing debt obligation with a new debt obligation under different terms, typically to take advantage of more favorable interest rates.

High-Coupon Debt

Bonds that offer higher interest payments due to having a high coupon rate, typically reflecting higher risk or longer maturity.