A natural monopoly regulated with a marginal cost pricing rule results in
A) a deadweight loss.
B) an economic profit for the regulated firm.
C) an economic loss for the regulated firm.
D) a normal profit for the regulated firm.

Question

Quizplus · Accepted Answer

Marginal cost pricing in a natural monopoly typically results in prices being set below the average total cost, leading to an economic loss for the firm since it cannot cover all its costs.

A Natural Monopoly Regulated with a Marginal Cost Pricing Rule