Refer to the information provided in Figure 13.7 below to answer the question(s) that follow. Figure 13.7
-Refer to Figure 13.7. If the government regulates Armstrong Cable so they can earn only a normal return, the price would be set at
A) $12.00.
B) $12.50.
C) $13.00.
D) $16.00.

Question

Refer to the information provided in Figure 13.7 below to answer the question(s) that follow.  Figure 13.7
-Refer to Figure 13.7. If the government regulates Armstrong Cable so they can earn only a normal return, the price would be set at
A) $12.00. 
B) $12.50. 
C) $13.00. 
D) $16.00.

Quizplus · Accepted Answer

A normal return is achieved where the price equals average total cost (ATC). In the context of the question, without the figure, the typical approach is to set the price where it intersects the ATC curve, which would allow the firm to cover all its costs, including the normal profit. Since I can't see the figure, the correct answer is based on the assumption that $13.00 is where price equals ATC.

Refer to the Information Provided in Figure 13