-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is
A) $30 and 20,000 household are served.
B) $10 and 40,000 household are served.
C) $10 and 20,000 household are served.
D) $20 and 30,000 households are served.

Question

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is
A) $30 and 20,000 household are served. 
B) $10 and 40,000 household are served. 
C) $10 and 20,000 household are served. 
D) $20 and 30,000 households are served.

Quizplus · Accepted Answer

A marginal cost pricing rule sets the price equal to the marginal cost. In this scenario, the price is $10, which corresponds to the marginal cost, and at this price, 40,000 households are served.

-Natural Gas Is a Natural Monopoly