The United Company competes with many other firms each producing slightly different products. Firms freely enter and exit this industry. The type of industry United Company operates in is

"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?

What will be an ideal response?

A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare

a. The total benefits gained from the two factories to the total costs of running the two factories. b. The incremental benefit expected from the second factory to the total costs of running the two factories. c. The incremental benefit expected from the second factory to the cost of the second factory d. The total benefits gained from the two factories to the incremental costs of running the two factories.