If a Natural Monopoly Is Told to Set Price Equal

question 286

Multiple Choice

If a natural monopoly is told to set price equal to average cost,then the firm

• A) is not able to set marginal revenue equal to marginal cost.
• B) automatically also sets price equal to marginal cost.
• C) will make a substantial economic profit.
• D) will incur an economic loss.
• E) sets a price that is lower than its marginal cost.