In many regulated industries, marginal cost will be
A)below average cost.
B)above total cost.
C)above marginal fixed cost.
D)below incremental cost.

Question

Quizplus · Accepted Answer

In regulated industries, the government sets a price ceiling that firms can charge for their products or services. Since the price is artificially restricted, firms may not be able to cover all of their costs, including fixed costs. Therefore, marginal cost is likely to be lower than average cost, leading to choice A as the correct answer.

In Many Regulated Industries, Marginal Cost Will Be