Author Question: To allow a public utility (which is a natural monopoly) to earn only a normal profit, the government ... (Read 32 times)

eruditmonkey@yahoo.com · **on:** Jun 30, 2018

To allow a public utility (which is a natural monopoly) to earn only a normal profit, the government should
a. do all of the following
b. set price equal to average cost
c. equate marginal cost and average cost
d. set marginal cost equal to marginal revenue
e. set price equal to marginal cost

Question 2

In the short run, a perfectly competitive ball bearing manufacturer will continue to produce at a loss if
a. it is covering all of its fixed cost
b. it is covering all of its variable cost plus part of its fixed cost
c. variable cost is less than fixed cost
d. fixed cost is zero
e. fixed cost is minimized