A socially- optimal price regulation will Not work if: A marginal cost is less t

Question

A socially- optimal price regulation will Not work if: A marginal cost is less than average total cost B marginal cost is less than average fixed cost C marginal cost is greater than average total cost D marginal cost is greater than average fixed cost A socially- optimal price regulation will Not work if: A marginal cost is less than average total cost B marginal cost is less than average fixed cost C marginal cost is greater than average total cost D marginal cost is greater than average fixed cost A marginal cost is less than average total cost B marginal cost is less than average fixed cost C marginal cost is greater than average total cost D marginal cost is greater than average fixed cost

Explanation / Answer

Answer

A marginal cost is less than average total cost

Socially optimum level of output is at MC=P, if the MC is less than ATC at MC=P then the regulation creates the loss for produces which will Not work.

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