The Process of Price Cap Regulation Includes Which of the Following
The process of price cap regulation includes which of the following? i. A price ceiling
Ii) Marginal cost pricing
Iii) Average cost pricing
A) i and iii
B) ii only
C) ii and iii
D) i only
E) i and ii
Earnings sharing regulation involves
A) setting the monopoly's price equal to its marginal cost.
B) assuming a natural monopoly will not charge a higher than the profit-maximising price.
C) requiring that the monopoly share its profits with its customers if the profits rise above a certain level.
D) setting a maximum price the monopoly may charge and maintaining it for many years.
E) setting the monopoly's price equal to its average total cost.
Which of the following best describes the capture theory of regulation? i. Regulation seeks an efficient use of resources.
Ii) Regulation is aimed at keeping prices as low as possible.
Iii) Regulation helps firms maximise economic profit.
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii and iii
If a natural monopoly is told to set price equal to average cost, then the firm
A) sets a price that is lower than its marginal cost.
B) is not able to set marginal revenue equal to marginal cost.
C) will incur an economic loss.
D) automatically also sets price equal to marginal cost.
E) will make a substantial economic profit.