Suppose the Local Government Is Considering Using Marginal Cost Pricing

Suppose the local government is considering using marginal cost pricing to set rates for a cable TV company.Which of the following arguments supports marginal cost pricing?

A) Marginal cost pricing gives the monopoly an economic profit and a reason to stay in business.
B) Marginal cost pricing gives the firm a normal economic profit and a reason to stay in business.
C) Marginal cost pricing results in allocative efficiency.
D) Unlike firms adopting average cost pricing, firms using marginal cost pricing do not require subsidies, which can be costly.
E) Unlike average cost pricing, marginal cost pricing enables monopolies to stay in business in the long run.