An argument for making regulated monopolies adopt marginal-cost pricing is that this would
A) increase productive efficiency by making price equal average cost.
B) benefit higher-income groups by making monopoly products more affordable.
C) increase managerial incentives to reduce employment and production.
D) make the marginal cost equal to society's valuation of the marginal benefit.

Question

Quizplus · Accepted Answer

Marginal-cost pricing ensures that the price of a good reflects the cost of producing an additional unit, aligning the price with the societal valuation of the marginal benefit, thus promoting allocative efficiency.

An Argument for Making Regulated Monopolies Adopt Marginal-Cost Pricing Is