How Should a Natural Monopoly Be Regulated Under the Social

Multiple Choice

How should a natural monopoly be regulated under the social interest theory of regulation?

A) By setting price equal to the average cost of production.
B) By allowing a price that maximises the profit of the natural monopoly.
C) By using a marginal cost pricing rule.
D) By using rate of return regulation.
E) By subsidising other producers to compete with the monopoly.