The Rail System in Metropolis Is a Natural Monopoly

The rail system in Metropolis is a natural monopoly.If the governmentregulates the system by setting the fare equal to marginal cost, which of thefollowing will be true?

A) The managers of the rail system will be allowed to adjust marginal cost so that they can get a normal rate
Of return on capital.
B) The managers of the rail system will be allowed to adjust marginal cost so that they can get a fair profit.
C) The rail system will earn economic profit at that fare.
D) If the government doesn't give the rail system a subsidy to supplement revenue from fares, the system
Will face continuous economic losses.
E) If the government doesn't give the rail system a subsidy to supplement revenue from fares, fare
Increases will push marginal cost upward.