If a natural monopoly is forced to use marginal cost pricing,which of the following is not true?

Question

Quizplus · Accepted Answer

If a natural monopoly is forced to use marginal cost pricing, it means that the price charged for each unit of output will be equal to the marginal cost, which is typically lower than the average total cost. As a result, average total costs will not increase, but instead, will stay the same or even decrease. Therefore, option A is not true. Instead, output will increase (B), allocative efficiency will be achieved (C), and economic profits will be reduced (D) as the monopoly will only be able to cover its average total costs and not earn any monopoly rent.

If a Natural Monopoly Is Forced to Use Marginal Cost