Which of the following will result in the most deadweight loss? ...

[jjjetplane]

Which of the following will result in the most deadweight loss?
 
  A) a natural monopoly regulated with marginal cost pricing
  B) an unregulated natural monopoly
  C) a natural monopoly regulated with average cost pricing
  D) All of the above result in the same deadweight loss.

Question 2

If reckless drivers are more likely than safe drivers to buy automobile insurance, then a moral hazard problem has occurred.
 
  Indicate whether the statement is true or false

[marict]

Answer to Question 1

B

Answer to Question 2

FALSE