Exhibit 15-1 -If Regulators Set Price Equal to Marginal Cost for the Marginal

question 58

Multiple Choice

Exhibit 15-1

-If regulators set price equal to marginal cost for the natural monopoly in Exhibit 15-1,then from the usual profit-maximizing position,price changes from

• A) $24 to $20,and quantity increases from 5 to 8
• B) $14 to $20,and quantity increases from 5 to 8
• C) $24 to $18,and quantity remains unchanged
• D) $24 to $18,and quantity increases from 5 to 8
• E) $24 to $22,and quantity increases from 5 to 10