A Serious Problem with Average Total Cost Pricing Is That

question 135

Multiple Choice

A serious problem with average total cost pricing is that

• A)the deadweight loss to society is greater than with unregulated monopoly pricing.
• B)the firm has no incentive to earn a profit.
• C)the deadweight loss to society is the same as with unregulated monopoly pricing.
• D)inefficiencies in the firm will not be tolerated.
• E)the firm has no incentive to reduce costs.

---

Definitions:

Consumer Choices

The selection of goods or services made from available alternatives by consumers based on their preferences and budget.

Budget Line

A visual depiction showing all the different pairs of two products that can be bought within a certain budget at particular price levels.

Market Baskets

A set of goods or services used as a standard for comparing purchasing power or cost of living in different locations.

Completeness

In economics, completeness refers to a property of preferences indicating that any two bundles of goods can be compared, allowing for decisions on which is preferred or if they are equally desirable.