If the regulatory agency sets a price where AR = AC for a natural monopoly, output will be:

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When a regulatory agency sets a price where Average Revenue (AR) equals Average Cost (AC) for a natural monopoly, the output will be greater than the monopoly's profit-maximizing level because the monopoly would prefer to produce less where its marginal revenue equals its marginal cost. However, this output will be less than the competitive level, as competitive markets tend to produce where price equals marginal cost, leading to a higher output level.

If the Regulatory Agency Sets a Price Where AR =