The reason an unregulated natural monopolist will produce at an economically inefficient quantity is

Question

Quizplus · Accepted Answer

An unregulated natural monopolist will produce at an economically inefficient quantity because the price that it sets for the output does not equal the true marginal cost of producing the good. This is because the monopolist has control over the market and can charge a price greater than the true cost of production. As a result, the monopolist will produce at a level that is below the socially optimal level of production, leading to deadweight loss in the market. Therefore, choice C is the correct answer.

The Reason an Unregulated Natural Monopolist Will Produce at an Economically