Refer to the information provided in Figure 13.7 below to answer the question(s) that follow. Figure 13.7
-Refer to Figure 13.7. If the government regulates Armstrong Cable so they can earn only a normal return, the price would be set ________ than if the company was not regulated.
A) $4 lower
B) $1 higher
C) $3 lower
D) $0.50 lower

Question

Refer to the information provided in Figure 13.7 below to answer the question(s) that follow.  Figure 13.7
-Refer to Figure 13.7. If the government regulates Armstrong Cable so they can earn only a normal return, the price would be set ________ than if the company was not regulated.
A) $4 lower 
B) $1 higher 
C) $3 lower 
D) $0.50 lower

Quizplus · Accepted Answer

Regulating a monopoly like Armstrong Cable to earn only a normal return typically involves setting prices where average total cost (ATC) intersects demand, which often results in a lower price than the monopoly would set unregulated. This is because monopolies tend to produce less and charge more to maximize profits. The specific amount lower would depend on the details of the cost and demand curves, but the general principle is that regulation to ensure only a normal return would lower the price compared to an unregulated monopoly scenario.

Refer to the Information Provided in Figure 13