Which of the following statements regarding a marginal-cost pricing rule for a natural monopoly is WRONG?
A) It maximizes total surplus in a regulated industry.
B) The firm produces the efficient quantity.
C) The firm's price equals its marginal cost.
D) The firm makes an economic profit.

Question

Quizplus · Accepted Answer

A marginal-cost pricing rule sets the price equal to the marginal cost, which typically results in the firm not covering its total costs, leading to an economic loss rather than a profit.

Which of the Following Statements Regarding a Marginal-Cost Pricing Rule