"When electric utilities are regulated using an average cost pricing rule, they will earn zero economic profit." Is the previous statement correct or incorrect? Why?
What will be an ideal response?
The statement is correct. An average cost pricing rule requires that the firm set its price equal to its average total cost. When price equals average total cost, the firm earns zero economic profit.
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The real interest rate is equal to the
A) nominal interest rate plus the inflation rate. B) nominal interest rate minus the inflation rate. C) nominal interest rate times the inflation rate. D) nominal interest rate divided by the inflation rate. E) inflation rate minus the nominal interest rate.
The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit
A) 15; $20 B) 10; $20 C) 10; $30 D) None of the above answers is correct.