There is no deadweight loss if the regulatory rule for a natural monopoly
A) is an average cost pricing rule.
B) sets price at a level that enables the regulated firm to earn a specified rate of return on its capital.
C) is a marginal cost pricing rule.
D) prevents the firm from engaging in any form of price discrimination.

Question

Quizplus · Accepted Answer

A marginal cost pricing rule eliminates deadweight loss by setting the price equal to the marginal cost, leading to an efficient allocation of resources.

There Is No Deadweight Loss If the Regulatory Rule for a Natural