If a regulatory board wanted to make sure that a natural monopoly earned a normal rate of return, it should set price which is equal to:
a. marginal cost
b. average fixed cost.
c. average variable cost.
d. average total cost.
d
You might also like to view...
The conditions for unaligned retailer and manufacturer incentives include
a. customers are unfamiliar with the product features before they shop for it b. retailers have no opportunity to educate consumers c. manufacturers are more efficient at education consumers d. demand for the product is decreased with some consumer education
Developing countries would benefit the most from a given increase in their education budgets if they spent more:
A. on primary and secondary education. B. in a way that promotes credentialism. C. on higher education. D. evenly across all types of education.
Figure 14.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers believe that 50% of the used bikes are lemons (low quality), how much will they be willing to pay for a used bike?
A. $50 B. $80 C. $125 D. $200
The cross-price elasticity of demand of products "A" and "B" is zero. This implies that "A" and "B" are
A) substitute products. B) complementary products. C) independent products. D) unique goods, as the price elasticity of demand for one of them is zero.