If a Natural Monopoly Is Told to Set Price Equal

Multiple Choice

If a natural monopoly is told to set price equal to average cost, then the firm

A) sets a price that is lower than its marginal cost.
B) is not able to set marginal revenue equal to marginal cost.
C) will incur an economic loss.
D) automatically also sets price equal to marginal cost.
E) will make a substantial economic profit.