Using average cost pricing to regulate a natural monopoly creates a deadweight loss.

Name: Using average cost pricing to regulate a natural monopoly creates a deadweight loss.
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Question

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Average cost pricing can lead to a deadweight loss because it sets prices equal to average costs, which may not reflect the efficient allocation of resources, leading to underproduction or overproduction compared to the socially optimal level.

Using Average Cost Pricing to Regulate a Natural Monopoly Creates