-Use the above figure. If a commission regulates the above monopoly using fair-return (average cost pricing) , then the industry's output will be ________ and the product's price will be ________.

Question

-Use the above figure. If a commission regulates the above monopoly using fair-return (average cost pricing), then the industry's output will be ________ and the product's price will be ________.

Quizplus · Accepted Answer

Under fair-return pricing, the monopoly is allowed to set a price equal to average total cost (ATC), which results in zero economic profit. This typically occurs where the demand curve intersects the ATC curve, corresponding to output Q3 and price P2.

-Use the Above Figure