-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the consumer surplus will be
A) $0.
B) $8 million.
C) $16 million.
D) $32 million.

Question

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the consumer surplus will be
A) $0. 
B) $8 million. 
C) $16 million. 
D) $32 million.

Quizplus · Accepted Answer

A marginal cost pricing rule sets the price equal to the marginal cost, maximizing consumer surplus by allowing consumers to purchase the good at the lowest possible price. In this scenario, the consumer surplus is $16 million.

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