A socially-optimal price regulation will NOT work if: A) ...

[Themember4]

A socially-optimal price regulation will NOT work if:
 
  A) marginal cost is less than average total cost.
  B) marginal cost is less than average fixed cost.
  C) marginal cost is greater than average total cost.
  D) marginal cost is greater than average fixed cost.

Question 2

Suppose a Chinese restaurant routinely provides free fortune cookies to its customers. The economic way of thinking suggests the restaurant is
 
  A) engaging in predatory pricing of its meals.
  B) attempting to increase its total profit.
  C) selling Chinese food below cost.
  D) doing all of the above.
  E) almost certainly doing none of the above.

[mrphibs]

Answer to Question 1

A

Answer to Question 2

B