Which of the following is true when regulators require a natural monopolist to set price equal to marginal cost?
A) This policy results in a less-than-socially-optimal allocation of resources.
B) The marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit.
C) The monopolist experiences recurring losses unless a subsidy is provided.
D) The monopolist earns a normal profit.
E) The monopolist earns an economic profit.
Correct Answer:
Verified
Q39: Exhibit 15.1 Q40: Exhibit 15.1 Q41: Exhibit 15.4 Q42: Suppose the local government is considering using Q43: Compared to the profit-maximizing outcome,average-cost pricing in Q45: When government regulations force a natural monopoly Q46: If a natural monopolist switches to marginal Q47: In which of the following ways can Q48: Production by a monopolist would result in Q49: Exhibit 15.4 Unlock this Answer For Free Now! View this answer and more for free by performing one of the following actions Scan the QR code to install the App and get 2 free unlocks Unlock quizzes for free by uploading documents
