If a regulator sets the price equal to the natural monopolist's marginal cost,
A)the monopoly will experience a loss
B)the monopoly will earn a profit
C)the monopoly will earn zero profit
D)consumers will be worse off than they would be if the firm's profit maximization activities were unregulated
E)the monopoly will be better off than it would be if its profit maximization activities were unregulated

Question

Quizplus · Accepted Answer

When price is set equal to marginal cost, the monopolist may not cover its average total costs, leading to a loss.

If a Regulator Sets the Price Equal to the Natural