###
**CFA Practice Question**

Under a policy of average-cost pricing, the government ______

B. picks a point on the demand curve where price equals marginal cost.

C. picks a point on the demand curve where price equals marginal revenue.

D. picks a price such that marginal revenue is equal to marginal cost.

E. sets the price equal to consumers' marginal willingness to pay.

A. picks a point on the demand curve where price equals average cost.

B. picks a point on the demand curve where price equals marginal cost.

C. picks a point on the demand curve where price equals marginal revenue.

D. picks a price such that marginal revenue is equal to marginal cost.

E. sets the price equal to consumers' marginal willingness to pay.

Correct Answer: A

This is the definition of average-cost pricing.

###
**User Contributed Comments**
0

You need to log in first to add your comment.