It is well know that a monopoly causes deadweight loss to society. One way in which a governing body can eliminate or reduce the amount of deadweight loss it to impose price controls. Two possible options are marginal cost pricing, and average total cost pricing. What are the costs and benefits of marginal cost pricing?

		It will eliminate some (but not all) deadweight loss, but it may drive the monopoly out of business.
		While it eliminates all of deadweight loss, it may drive the monopoly out of business.
		It will eliminate some (but not all) deadweight loss. However, the monopoly will stay in business.
		Cannot be determined from the information given,

5.263 points

Question 18

It is well know that a monopoly causes deadweight loss to society. One way in which a governing body can eliminate or reduce the amount of deadweight loss it to impose price controls. Two possible options are marginal cost pricing, and average total cost pricing. What are the costs and benefits of average total cost pricing?

		It will eliminate some (but not all) deadweight loss, but it may drive the monopoly out of business.
		While it eliminates all of deadweight loss, it may drive the monopoly out of business.
		It will eliminate some (but not all) deadweight loss. However, the monopoly will stay in business.
		Cannot be determined from the information given,