Setting the price charged by a natural monopoly equal to zero:
A)generates economic losses.
B)creates incentives that tend to shift average total cost curve upward.
C)imposes a price that is more than average total cost.
D)involves production at a socially inefficient level of output.
E)generates a welfare cost for the society.

Question

Quizplus · Accepted Answer

Setting the price to zero would not cover the costs of production, leading to economic losses for the monopoly.

Setting the Price Charged by a Natural Monopoly Equal to Zero