Exhibit 26-4

-Refer to Exhibit 26-4.The profits of an unregulated natural monopoly that becomes regulated on the basis of marginal-cost pricing would

Question

Exhibit 26-4
 
-Refer to Exhibit 26-4.The profits of an unregulated natural monopoly that becomes regulated on the basis of marginal-cost pricing would

Quizplus · Accepted Answer

Under marginal-cost pricing, a natural monopoly would set prices equal to marginal cost, which is typically below average total cost for a natural monopoly. This would result in the firm incurring losses, leading to negative profits.

Exhibit 26-4 -Refer to Exhibit 26-4.The Profits of an Unregulated Natural Monopoly