A marginal cost pricing rule for a natural monopoly sets _______.
A) price equal to marginal cost and greater than average total cost
B) marginal revenue equal to average total cost
C) price equal to marginal cost
D) marginal revenue equal to marginal cost

Question

Quizplus · Accepted Answer

A marginal cost pricing rule for a natural monopoly involves setting the price equal to the marginal cost to achieve allocative efficiency, even though this might not cover the average total cost.

A Marginal Cost Pricing Rule for a Natural Monopoly Sets