Exhibit 15-4

-The firm in Exhibit 15-4 is a natural monopoly.If a government regulator forces the monopoly to set price equal to marginal cost,the economic profit is:

Question

Exhibit 15-4
 
-The firm in Exhibit 15-4 is a natural monopoly.If a government regulator forces the monopoly to set price equal to marginal cost,the economic profit is:

Quizplus · Accepted Answer

When a natural monopoly is forced to set price equal to marginal cost, it often incurs a loss because the average total cost is higher than the marginal cost at the efficient scale of production. This results in a negative economic profit.

Exhibit 15-4 -The Firm in Exhibit 15-4 Is a Natural Monopoly.If a a Natural