Author Question: The reason an unregulated natural monopolist will produce at an economically inefficient quantity is ... (Read 122 times)

future617RT · **on:** Jun 29, 2018

The reason an unregulated natural monopolist will produce at an economically inefficient quantity is

A) due to the fact that the monopolist will equate marginal cost with price to determine the output level.
B) due to the fact that the monopolist will equate average total cost with price to determine the output level.
C) that the price does not equal the true marginal cost of producing the good.
D) that the monopolist will produce a quantity greater than the minimum of the average total cost curve.

Question 2

What are the key characteristics of a public good?

What will be an ideal response?

zenzy · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

A public good is not subject to the principle of rival consumption in the sense that it can be provided to different individuals without additional costs. A public good is also subject to the free-rider problem in the sense that persons can benefit from the good without paying for it.