Which of the following is true when regulators require a natural monopolist to set price equal to marginal cost?
a. This policy results in a less than socially optimal allocation of resources.
b. The marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit.
c. The monopolist will face recurring losses unless a subsidy is provided.
d. The monopolist will earn a normal profit.
e. The monopolist will earn more than a fair return.
C
Economics
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Define tax incidence
What will be an ideal response?
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