If the government wants a natural monopoly to earn a "fair return" or zero economic profit, it will set
a. price equal to marginal cost
b. price equal to average total cost
c. price equal to average revenue
d. marginal cost equal to marginal revenue
e. marginal cost equal to average total cost
B
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Which of the following leads to a lower rate of capacity utilization in a firm, assuming all else equal?
A) An increase in the number of workers in the firm B) An increase in the demand for the firm's product C) A decrease in the number of workers in the firm D) A decrease in the price of the firm's product
Higher interest rates:
a) increase consumption and investment spending. b) decrease consumption and increase investment spending. c) decrease consumption and investment spending. d) increase consumption and decrease investment spending.
Which of the following factors of production is not variable in the long run?
A. the size of the firm's plant. B. property taxes on the assets of the firm. C. highly trained labor. D. All factors of production are variable in the long run.
Other things being equal, a higher saving rate
A. is associated with a decline in the rate of growth of the population. B. means higher standards of living in the future. C. leads to higher interest rates. D. means higher standards of living today.