Which of these regulatory systems for a natural monopoly results in a normal profit for the firm?
A) marginal cost pricing rule
B) a price cap set above the firm's ATC
C) average cost pricing rule
D) a price cap set below the firm's ATC

Question

Quizplus · Accepted Answer

The average cost pricing rule allows a natural monopoly to set prices equal to its average total costs, ensuring it covers all its costs and earns a normal profit, without making an economic profit.

Which of These Regulatory Systems for a Natural Monopoly Results