As a Policy Option for Regulating Natural Monopoly,marginal Cost Pricing

question 24

Multiple Choice

As a policy option for regulating natural monopoly,marginal cost pricing is desirable because

• A)consumers pay the lowest possible price that will generate sufficient revenue to cover the costs of the natural monopolist.
• B)allocative efficiency is achieved.
• C)price is set equal to minimum long-run average cost.
• D)all of the above.

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Definitions:

Iron Cage

Max Weber’s pessimistic description of modern life, in which we are caught in bureaucratic structures that control our lives through rigid rules and rationalization.

Rationalization

The process of replacing traditional and emotional thought with reason and practicality.

Rigid Rules

Strict and inflexible guidelines or regulations that dictate behavior, often enforced by institutions or authorities.

Dramaturgy

An approach in sociology that views social life as a series of dramatic performances, with individuals playing various roles.