People Window Help ege-Ec × G the graph below represents an X ng.com/ibiscms/mod

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People Window Help ege-Ec × G the graph below represents an X ng.com/ibiscms/mod/ibis/view.php?id 3801767 marginal cost pri Jump to.. o 11/5/2017 1 1:55 PM O 84.5/100 0 1 1/4/2017 02:01 PM e) Gradebook Calculator Question 32 of 40 Map Sapling Learning The terms to the right refer to different approaches to regulating natural monopolies. Drag each into the bin corresponding with its description. A firm is allowed to price its product so that it eams a normal return on capital invested. Average Cost Pricing Rule Firms are directed to charge the price associated with the extra cost of making each unit. This pricing rule often leads to firms earning a negative profit Rate of Return Regulation Firms charge a price that allows them to earn only a normal economic profit Marginal Cost Pricing Rule This places maximum limits on the price firms can charge for a good or service. Price Caps There is a hint availablel divider bar again to hide the hint Close Prevous Check Answer e Next Est

Explanation / Answer

When firms are allowed to charge the price they are willing to charge and they earn normal return, that is the first case, we must have a rate of return regulation.

The second case has firms earning negative profit where firms are directed to charge the price and not free to charge any price. This implies in the second case we have marginal cost pricing rule

In the third case we have an average cost pricing rule where firms will never be able to earn any economic profit

The last face as price caps because there are no limits on the price firm can charge.

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