In a regulated natural monopoly, a marginal cost pricing rule maximizes
A) total costs.
B) producer surplus.
C) economic profit.
D) total surplus.

Question

Quizplus · Accepted Answer

In a regulated natural monopoly, marginal cost pricing leads to an efficient allocation of resources, maximizing total surplus by equating price with marginal cost, which reflects the true cost of producing an additional unit.

In a Regulated Natural Monopoly, a Marginal Cost Pricing Rule