Use the following table to answer the question : Table 15-3: shows the average cost [AC],marginal cost [MC],and demand [D] curves for a natural monopoly;Qi denotes quantity and Pi denotes price.
-In Figure 15-3,under marginal-cost pricing,a firm would require a government subsidy of at least _____ to remain profitable.

Question

Use the following table to answer the question : Table 15-3: shows the average cost [AC],marginal cost [MC],and demand [D] curves for a natural monopoly;Qi denotes quantity and Pi denotes price.

-In Figure 15-3,under marginal-cost pricing,a firm would require a government subsidy of at least _____ to remain profitable.

Quizplus · Accepted Answer

Under marginal-cost pricing, a firm would need a subsidy to cover the difference between its costs and the price it can charge to meet those costs. The correct choice (A) likely represents this difference, although the specific notation seems to be encoded or incorrect. The explanation is based on the principle of marginal-cost pricing in economics, where a firm's price is set equal to its marginal cost, and if this price doesn't cover average total costs, a subsidy might be needed for the firm to break even or remain profitable.

Use the Following Table to Answer the Question : Table