A natural monopolist that sets prices equal to marginal cost will:
A)set a price below average total costs.
B)be efficient.
C)incur losses.
D)All of these statements are true.

Question

Quizplus · Accepted Answer

A natural monopolist setting prices equal to marginal cost will set a price below average total costs, be efficient in terms of resource allocation, and incur losses because the price does not cover the average total costs.

A Natural Monopolist That Sets Prices Equal to Marginal Cost