When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly:
A)has no incentive to exit the industry
B)will experience a price below average total cost
C)may rely on a government subsidy to remain in business
D)both B and C are true

Question

Quizplus · Accepted Answer

Marginal-cost pricing often results in prices below average total cost for natural monopolies, leading to potential losses that may require government subsidies to sustain operations.

When Regulators Use a Marginal-Cost Pricing Strategy to Regulate a Natural