A natural monopoly that is not regulated will choose to produce at the

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A natural monopoly, without regulation, will produce where marginal revenue equals marginal cost to maximize profits. This is because, as the sole producer, the natural monopoly can control the price and output level and faces a downward sloping demand curve. The point where marginal revenue equals marginal cost is also the point where the monopolist is producing at allocative efficiency, producing where the marginal benefit equals the marginal cost to society.

A Natural Monopoly That Is Not Regulated Will Choose to Produce