Under an average-cost pricing policy,a local water company will face the following:
A)the local water company chooses the price at which short-run average cost curve intersects the average.
B)the local water company chooses the price at which long-run average cost curve intersects the average.
C)the government chooses the price at which the demand curve intersects the short-run marginal-cost curve
D)the government chooses the price at which the demand curve intersects the long-run average-cost curve.

Question

Quizplus · Accepted Answer

Under an average-cost pricing policy, the government typically sets the price where the demand curve intersects the long-run average-cost curve to ensure the company covers its costs, including a normal profit.

Under an Average-Cost Pricing Policy,a Local Water Company Will Face