The government will have to subsidize a natural monopoly in the long run if regulators choose to pursue:
A) marginal cost pricing
B) fair-return pricing.
C) per se pricing.

Question

Quizplus · Accepted Answer

Marginal cost pricing often results in prices below average total cost for a natural monopoly, leading to losses that require government subsidies to sustain the firm.

The Government Will Have to Subsidize a Natural Monopoly in the Long