A regulatory authority might require a monopoly to use marginal cost pricing because marginal cost pricing
A)lowers but does not eliminate deadweight loss to society.
B)does not change deadweight loss to society.
C)eliminates any deadweight loss to society.
D)minimizes the total cost of a natural monopoly.
E)increases deadweight loss to society.

Question

Quizplus · Accepted Answer

Marginal cost pricing leads to an outcome where price equals marginal cost, which is the condition for allocative efficiency in a competitive market. This eliminates any deadweight loss to society, as resources are allocated in the most efficient manner possible, with the quantity supplied equating to the quantity demanded at the marginal cost.

A Regulatory Authority Might Require a Monopoly to Use Marginal