To allow a public utility (which is a natural monopoly) to earn only a normal profit, the government should
a. do all of the following
b. set price equal to average cost
c. equate marginal cost and average cost
d. set marginal cost equal to marginal revenue
e. set price equal to marginal cost
B
You might also like to view...
The table above has the domestic demand and domestic supply schedules for a good. According to the table, the no-trade price of the good is
A) $4. B) $6. C) $8. D) $10. E) $2.
What is the difference between equity instruments and debt instruments?
What will be an ideal response?
When two goods are unrelated
A) the demands for both goods will be inelastic. B) cross price elasticity of demand will be 0. C) cross price elasticity of demand will be negative. D) cross price elasticity of demand will be positive.
The "Bubbles, Bubbles" soap bubble firm's price and cost data are: price = $10; MR = $10; MC = $10; ATC = $10 . This firm is
a. making an economic profit of $10 b. in monopolistic competition and in short-run equilibrium c. about to shut down because economic profit is zero d. a monopolist with a relatively inelastic demand e. in a perfectly competitive market and in long-run equilibrium