The Figure Below Shows Revenue and Cost Curves of a Natural

question 39

Multiple Choice

The figure below shows revenue and cost curves of a natural monopoly firm.Figure 14.1
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In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-According to Figure 14.1, in order to attain allocative efficiency, the regulatory body must attempt to set the price equal to:

• A)P₂.
• B)P₃.
• C)P₁.
• D)P₄.
• E)P₅.

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Definitions:

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