Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to
a. all of the following
b. a higher price
c. decreased consumer surplus
d. the elimination of economic profit
e. less output
D
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According to the authors of your text, the phrase "property rights" can be substituted with the phrase
A) "property wrongs." B) "what people think they can get away with." C) "animal rights." D) "rugged individualism." E) "free market capitalism."
The principal-agent problem means that managers must
A) find ways for managers to get people to buy stock in their company. B) devise compensation rules to induce principals to act in the best interest of agents. C) devise compensation rules to induce agents to act in the best interest of principals. D) find efficient agents who will negotiate fair compensation rules for a firm's principal managers.