A natural monopoly that charges the profit-maximizing price will produce ________ amount of output than a ________.
A) a larger; natural monopoly regulated with an average cost pricing rule
B) a more efficient; perfectly competitive industry
C) the same; natural monopoly regulated with a marginal cost pricing rule
D) a smaller; natural monopoly regulated with a marginal cost pricing rule

Question

Quizplus · Accepted Answer

A natural monopoly charging the profit-maximizing price will produce less output than if it were regulated with a marginal cost pricing rule, as the latter would typically result in higher output to meet demand at a lower price.

A Natural Monopoly That Charges the Profit-Maximizing Price Will Produce