If the marginal cost pricing rule is used to regulate a natural monopolist, the monopolist
A) earns an economic profit.
B) earns a normal profit.
C) sustains an economic loss.
D) earns a monopoly profit.

Question

Quizplus · Accepted Answer

Under marginal cost pricing, a natural monopolist would set the price equal to the marginal cost, which typically results in the price being lower than the average total cost, leading to an economic loss.

If the Marginal Cost Pricing Rule Is Used to Regulate