When an average cost pricing rule is imposed on a natural monopoly
A) total surplus is maximized and the monopoly incurs an economic loss.
B) the monopoly makes zero economic profit.
C) the monopoly makes an economic profit.
D) total surplus is maximized and the monopoly makes an economic profit.

Question

Quizplus · Accepted Answer

An average cost pricing rule allows the monopoly to set prices equal to average costs, enabling it to cover all its costs and make zero economic profit, while preventing economic losses.

When an Average Cost Pricing Rule Is Imposed on a Natural