For a regulated natural monopoly, an average cost pricing rule sets price equal to
A) average fixed cost.
B) average total cost.
C) average external cost.
D) average variable cost.

Question

Quizplus · Accepted Answer

An average cost pricing rule for a regulated natural monopoly sets the price equal to average total cost to ensure the firm covers all its costs, including both fixed and variable costs, while preventing excessive profits.

For a Regulated Natural Monopoly, an Average Cost Pricing Rule