-If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then it will produce
A) 2 million units.
B) 3 million units.
C) 4 million units.
D) 5 million units.

Question

-If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then it will produce
A) 2 million units. 
B) 3 million units. 
C) 4 million units. 
D) 5 million units.

Quizplus · Accepted Answer

A marginal cost pricing rule requires the firm to set its price equal to its marginal cost. In a natural monopoly, this typically occurs where the demand curve intersects the marginal cost curve, which in this case is at 4 million units.

-If a Marginal Cost Pricing Rule Is Imposed on the Natural