If a natural monopoly has an average cost pricing rule imposed, the rule will
A) maximize total surplus in the regulated industry.
B) generate an economic loss for the regulated firm.
C) reduce the consumer surplus and generate a deadweight loss when compared to a marginal cost pricing rule.
D) set price below marginal cost.

Question

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The Answer of If a natural monopoly has an average cost pricing rule imposed, the rule will
A) maximize total surplus in the regulated industry.
B) generate an economic loss for the regulated firm.
C) reduce the consumer surplus and generate a deadweight loss when compared to a marginal cost pricing rule.
D) set price below marginal cost.

If a Natural Monopoly Has an Average Cost Pricing Rule