If a Public Service Commission Requires a Natural Monopoly to Set

question 262

Multiple Choice

If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost, this will result in

• A) excessive economic profits to the monopoly.
• B) normal economic profits to the monopoly.
• C) losses to the monopoly.
• D) either economic profits or losses, depending on the efficiency of the monopoly.