For a natural monopoly, if price is set equal to marginal cost then the firm incurs an economic loss.

Name: For a natural monopoly, if price is set equal to marginal cost then the firm incurs an economic loss.
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Question

Quizplus · Accepted Answer

A natural monopoly has high fixed costs and low marginal costs, so setting price equal to marginal cost often results in prices that are too low to cover total costs, leading to an economic loss.

For a Natural Monopoly, If Price Is Set Equal to Marginal