Exhibit 15-1 If Regulators Set Price Equal to Marginal

Multiple Choice

Exhibit 15-1 If regulators set price equal to marginal cost for the natural monopoly in Exhibit 15-1, then from the usual profit-maximizing position, price changes from

A) $24 to $18, and quantity increases from 5 to 8
B) $14 to $20, and quantity increases from 5 to 8
C) $24 to $18, and quantity remains unchanged
D) $24 to $22, and quantity increases from 5 to 10