A regulatory agency that imposes a price ceiling in order to limit monopoly profits to a "fair rate of return" is forcing the monopolist to sell at a price equal to
A) average fixed cost.
B) average total cost.
C) marginal cost.
D) average variable cost.

Question

Quizplus · Accepted Answer

A price ceiling set to ensure a "fair rate of return" typically means the monopolist is allowed to cover its average total costs, including a normal profit, but not earn excessive monopoly profits.

A Regulatory Agency That Imposes a Price Ceiling in Order