When Used with a Natural Monopoly,an Average Cost Pricing Rule

question 174

Multiple Choice

When used with a natural monopoly,an average cost pricing rule results in

• A) the efficient level of output.
• B) economic losses for the firm.
• C) the need for government to subsidize the natural monopoly.
• D) zero economic profit for the firm.
• E) the firm making an economic profit.

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Definitions:

Kuder-Richardson

A set of formulas used to assess the reliability of binary (e.g., true/false, yes/no) scored tests or items within tests.

Low Validity

refers to the situation where a test does not accurately measure what it is supposed to measure, indicating a weak relationship between test scores and the intended construct.

Item Characteristic Curve

A graphical representation that shows the probability of a respondent answering a test item correctly at different levels of ability.

Item Response Theory

A theory and related statistical models that estimate the probability of an individual responding to a specific item on a test, based on the item characteristics and the individual's latent trait level.