If a Monopolist's Production Process Has Economies of Scale and Average

question 29

Multiple Choice

If a monopolist's production process has economies of scale and average cost exceeds marginal cost, then

• A)the government should set price equal to marginal cost.
• B)if the government sets price equal to marginal cost, the monopoly will go out of business.
• C)if the government sets price equal to average cost, the monopoly will go out of business.
• D)the government cannot regulate price.