Economic efficiency requires that a natural monopoly's price be
A) equal to average variable cost where it intersects the demand curve.
B) equal to average total cost where it intersects the demand curve.
C) equal to the lowest price the firm can charge and still make a normal profit.
D) equal to marginal cost where it intersects the demand curve.
Question 2
According to Porter's Five Competitive Forces Model, which kinds of products are most likely to limit the ability of firms in an industry to raise prices?
A) complementary products produced by different firms in the same industry
B) similar products produced by similar industries in low-cost countries
C) differentiated products that target a small subsegment of the industry
D) substitutable products produced by firms in different industries
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