Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: Water Works
-(Figure: Water Works) Look at the figure Water Works, which describes a small town's water works, a natural monopoly. If regulators require the water works to charge the price that just covers average total cost, the water works will:

A) earn profits.
B) break even.
C) incur losses.
D) have a large producer surplus.