Since Natural Monopolies Have a Declining Average Cost Curve,regulating Natural

question 106

Multiple Choice

Since natural monopolies have a declining average cost curve,regulating natural monopolies by setting price equal to marginal cost would

• A) cause the monopolist to operate at a loss.
• B) result in a less than optimal total surplus.
• C) maximize producer surplus.
• D) result in higher profits for the monopoly.

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