Which of the following is true?
a. Average cost pricing reduces the incentives for a monopolist to find ways to reduce its costs
b. With natural monopoly, if regulators allow the firm to earn profits, there will be a welfare cost from producing too little of the good.
c. Government regulation of monopolies aims to achieve the efficiency of large-scale production, without permitting the producers to charge monopoly prices.
d. All of the above are true.
d
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From the social perspective, a major criticism of oligopolies is that
A) successful collusion leads to a monopoly-like outcome. B) price wars usually break out. C) advertising hardly ever occurs. D) cartels are unstable.
The rental price of capital is determined by the
a. forces of supply and demand in capital markets. b. amount of equity that is generated in equity markets. c. amount of bond financing used by profit-maximizing firms. d. amount of dividends paid out to stockholders by profit-maximizing firms.