-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does NOT inflate its costs, then the firm will produce
A) 8 million units and set a price of $21 per unit.
B) 12 million units and set a price of $18 per unit.
C) 16 million units and set a price of $16 per unit.
D) nothing unless the government provides subsidies to cover its losses.

Question

-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does NOT inflate its costs, then the firm will produce
A) 8 million units and set a price of $21 per unit. 
B) 12 million units and set a price of $18 per unit. 
C) 16 million units and set a price of $16 per unit. 
D) nothing unless the government provides subsidies to cover its losses.

Quizplus · Accepted Answer

The Answer of 
-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does NOT inflate its costs, then the firm will produce
A) 8 million units and set a price of $21 per unit. 
B) 12 million units and set a price of $18 per unit. 
C) 16 million units and set a price of $16 per unit. 
D) nothing unless the government provides subsidies to cover its losses.

-In the Above Figure, If the Natural Monopoly Is Regulated