The figure below shows the cost and revenue curves for a natural monopolist. Suppose the monopolist was originally producing at a profit-maximizing output level. If regulators set price equal to marginal cost, the price will change from:
Figure 15.1

A) $24 to $18, and quantity will increase from 5 units to 8 units.
B) $14 to $20, and quantity will increase from 5 units to 8 units.
C) $24 to $18, and quantity will remain unchanged.
D) $18 to $14, and quantity will increase from 5 units to 8 units.
E) $24 to $22, and quantity will increase from 5 units to 10 units.
Correct Answer:
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