If a Regulatory Agency Sets the Price Equal to Marginal

Multiple Choice

If a regulatory agency sets the price equal to marginal cost for a natural monopoly, the

A) government might have to provide a subsidy to the firm to keep it in business.
B) firm makes zero economic profit.
C) firm makes an economic profit, though not the maximum economic profit.
D) firm makes the maximum economic profit.
E) price is the same as the unregulated monopoly price.