"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
The statement is incorrect. If a firm is regulated using a marginal cost pricing rule, the firm incurs an economic loss.
You might also like to view...
What is the best outcome for society: When firms in an oligopoly operate as a monopoly or when they act as perfect competitors? Briefly explain your answer
What will be an ideal response?
Unlike purely competitive firms, firms in monopolistic competition will operate with excess capacity even in long-run equilibrium
a. True b. False Indicate whether the statement is true or false
Efficiency refers to whether a market outcome is fair, while equality refers to whether the maximum amount of output was produced from a given number of inputs
a. True b. False Indicate whether the statement is true or false
Anti-poverty programs
a. encourage saving among recipient groups. b. impose a very low marginal tax rate on income. c. are only made available to those with no other source of income. d. may discourage the poor from escaping poverty on their own.