Because Natural Monopolies Have a Declining Average Cost Curve, Regulating

question 281

Multiple Choice

Because 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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