A natural monopolist's ability to price its product is
A)constrained by the market demand curve.
B)constrained by market supply.
C)not affected by market demand.
D)enhanced by regulatory control of the government.

Question

Quizplus · Accepted Answer

The ability of a natural monopolist to price its product is constrained by the market demand curve. As the monopolist is the only supplier in the market, it can potentially charge higher prices, but it still needs to consider the demand for its product and the willingness of consumers to pay. If it charges a price that is too high, it may drive away customers or encourage new competition to enter the market. Thus, the monopolist's pricing ability is ultimately limited by the demand curve, which represents the relationship between price and quantity demanded by consumers.

A Natural Monopolist's Ability to Price Its Product Is