-If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then consumer surplus will be
A) $0.
B) $8 million.
C) $9 million.
D) $16 million.

Question

-If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then consumer surplus will be
A) $0. 
B) $8 million. 
C) $9 million. 
D) $16 million.

Quizplus · Accepted Answer

An average cost pricing rule allows the natural monopoly to set prices equal to average costs, which typically results in a consumer surplus that is greater than zero but less than the maximum possible surplus. In this scenario, the consumer surplus is $9 million.

-If an Average Cost Pricing Rule Is Imposed on the Natural