If the Government Regulates a Natural Monopoly by Forcing the Firm

question 70

Multiple Choice

If the government regulates a natural monopoly by forcing the firm to set price equal to marginal cost,

• A) the firm will earn a negative economic profit.
• B) the firm will earn zero economic profit.
• C) the firm will earn a fair economic profit.
• D) the firm will earn a positive and large economic profit.

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