Fair-return pricing is a practical approach to monopoly price regulation but:
A) it is difficult to measure implicit costs.
B) it is difficult to measure explicit costs.
C) it will reduce research and development.
D) the monopoly may not receive a high enough price to cover costs.

Question

Quizplus · Accepted Answer

Fair-return pricing involves setting prices that allow a monopoly to cover its costs, including a normal profit. However, measuring implicit costs, such as opportunity costs, can be challenging, making it difficult to determine the appropriate price level.

Fair-Return Pricing Is a Practical Approach to Monopoly Price Regulation