A Natural Monopoly's Output Is Less If It Is Regulated

question 58

Multiple Choice

A natural monopoly's output is less if it is regulated with

• A) a marginal cost pricing rule than if it is unregulated.
• B) an average cost pricing rule than if it is unregulated.
• C) an average cost pricing rule than if it is regulated with a marginal cost pricing rule.
• D) a marginal cost pricing rule than if it is regulated with an average cost pricing rule.
• E) More information about the firm's demand is needed to determine how its output depends on what regulation it faces.

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Definitions:

Sampling Distribution

The likelihood distribution associated with a specific statistic derived from a random sample.

Normal Distribution

A type of continuous probability distribution for a real-valued random variable that is symmetrically bell-shaped, centered around its mean.

Sampling Error

The discrepancy between the statistical characteristics of a population and those of a sample from that population.

Sample Mean

The average value of a sample set, calculated by summing the sample points and dividing by the number of samples.