Compared to the profit-maximizing outcome,average-cost pricing in a natural monopoly leads to _____

Name: Compared to the profit-maximizing outcome,average-cost pricing in a natural monopoly leads to _____
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Question

Quizplus · Accepted Answer

Average-cost pricing in a natural monopoly typically leads to the elimination of economic profit because the firm sets the price equal to average costs, covering all its costs including a normal profit, but not earning any economic profit above this.

Compared to the Profit-Maximizing Outcome,average-Cost Pricing in a Natural Monopoly