The Figure Below Shows Revenue and Cost Curves of a Natural

question 73

Multiple Choice

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 26.1 In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
Refer to Figure 26.1.If the regulatory agency sets the fair-rate-of-return price, the monopolist will:

• A)suspend production.
• B)just break even.
• C)earn super normal profits.
• D)incur losses.
• E)be able to cover only the variable costs.

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Definitions:

Unlimited Liability

A legal status where business owners are personally responsible for all the debts and liabilities of the business.

Sole Proprietors

Individuals who own and operate their businesses alone, assuming complete control and responsibility for all financial aspects.

Government Regulations

Rules established by government agencies to control the behavior of individuals, businesses, and other entities within their jurisdiction.

Employment Contract

A legal agreement between an employer and an employee that outlines the terms of employment, including duties, duration, and compensation.