Which of the following is true of a natural monopoly?

a. If regulated, the firm will have a higher level of output than an unregulated firm, whether the regulation is based on average cost, marginal cost, or normal profit.
b. If regulated, the firm will have a lower level of output than an unregulated firm, whether the regulation is based on average cost, marginal cost, or normal profit.
c. If regulated, the firm that is only allowed a normal profit will be allowed to charge a price in excess of its average cost.
d. If regulated, the firm that is only allowed a normal profit will be allowed to produce more than a firm that must set a price equal to its marginal cost.
e. If regulated, the firm that is only allowed a normal profit will be allowed to produce more than a firm that must set a price equal to its average cost.


A

Economics

You might also like to view...

Deterring entry might require a firm to

A) price their product closer to the competitive price than to the monopoly price. B) price their product closer to the monopoly price than to the competitive price. C) drop output almost to zero to show the consumers "who's boss." D) drop price almost to zero to get price below marginal cost.

Economics

When firms enter a market, the supply increases and price:

A. increases and profits decrease. B. falls and profits increase. C. falls and profits decrease. D. increases and profits increase.

Economics

The equilibrium price is the same as the market-clearing price

a. True b. False Indicate whether the statement is true or false

Economics

Which of the following is NOT a true statement?

A) It is unclear whether any of the decline in U.S. manufacturing employment can be attributed to Chinese growth. B) China's growth has been beneficial to many countries. C) China does not import many goods. D) China had large trade surpluses.

Economics