If the government wants to regulate a natural monopoly,it will force the firm to set price equal to
A) average cost.
B) marginal cost.
C) marginal revenue.
D) None of the above.

Question

Quizplus · Accepted Answer

Regulating a natural monopoly by setting the price equal to average cost allows the firm to cover its costs, including a normal profit, while preventing it from charging excessively high prices.

If the Government Wants to Regulate a Natural Monopoly,it Will