Under a marginal cost pricing rule, a natural monopoly
A) incurs an economic loss.
B) makes a reasonable profit.
C) earns accounting profits, but breaks even in economic terms.
D) makes an economic profit.
E) makes a normal profit, but it cannot be determined whether or not it makes an accounting profit.

Question

Quizplus · Accepted Answer

Under a marginal cost pricing rule, a natural monopoly would incur an economic loss because its average total cost would be higher than the price set by marginal cost pricing, leading to losses.

Under a Marginal Cost Pricing Rule, a Natural Monopoly