If average- cost pricing is imposed on a falling- cost natural monopoly, the result will be
A) economic losses.
B) zero economic profit.
C) economic profits.
D) exit from the industry in the short run.
E) losses and exit from the industry in the long run.

Question

Quizplus · Accepted Answer

Average-cost pricing allows the natural monopoly to cover its costs, including a normal profit, resulting in zero economic profit.

If Average- Cost Pricing Is Imposed on a Falling- Cost