Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in
A) least cost pricing and average cost pricing.
B) price discrimination and two-part tariff pricing.
C) zero profit pricing.
D) profit-maximizing pricing.
E) None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss.
B
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Refer to the above figure. If the marginal cost curve for pollution abatement shifts to the right, everything considered, the
A) degree of air quality or cleanliness will also decrease. B) the degree of air quality or cleanliness will stay unchanged. C) the degree of air quality will improve. D) the marginal cost of pollution abatement has nothing to do with air quality.
Four possibilities are equally likely and have payoffs of $2, $4, $6, and $8 . The expected value is:
a. $5 b. $6 c. $7 d. $8