Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to
A)all of the following
B)a higher price
C)decreased consumer surplus
D)the elimination of economic profit
E)less output

Question

Quizplus · Accepted Answer

Average cost pricing in a natural monopoly sets the price equal to the average cost, which eliminates economic profit as the firm covers its costs but does not earn extra profit.

Compared to the Profit-Maximizing Outcome, Average Cost Pricing in Natural