Question

The problem with average-cost pricing regulation is that once it is in place, there is a tendency for the:________

Answer 1

Answer:

a.  ATC curve to shift upward

Explanation:

Average cost pricing is a form of pricing that appears as one of the ways in which the government operates a monopoly market. The government, however, may utilize average cost pricing as a tool to oversee prices monopolists may charge.

In other words, this implies that Monopolists always incline to produce less than the optimal amount boosting the prices up.

Hence, the problem with average-cost pricing regulation is that once it is in place, there is a tendency for the: "Average Total Cost curve to shift upward." This can be a result of an increase in output and reduction price