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One Solution to the Problems of Marginal-Cost Pricing of a Regulated

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One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?


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Standard of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class in a certain geographic area.

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