If a regulatory board wanted to make sure that a natural monopoly earned a normal rate of return, it should set price which is equal to:
A)marginal cost.
B)average fixed cost.
C)average variable cost.
D)average total cost.
E)average total cost, plus a ten percent normal return on investment.

Question

Quizplus · Accepted Answer

Setting the price equal to average total cost allows the natural monopoly to cover all its costs, including both fixed and variable costs, ensuring it earns a normal rate of return without making excessive profits.

If a Regulatory Board Wanted to Make Sure That a Natural