If a natural monopoly regulatory board sets a price where marginal cost is equal to demand
A)the firm would earn monopoly profits.
B)economic efficiency would not be achieved.
C)the firm would incur a loss.
D)the firm would break even.

Question

Quizplus · Accepted Answer

When a natural monopoly is regulated to set prices where marginal cost equals demand, the price is typically below average total cost, leading the firm to incur a loss.

If a Natural Monopoly Regulatory Board Sets a Price Where