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If an Average Cost Pricing Rule Is Imposed on the Natural

Question 343

Multiple Choice

If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will


A) incur an economic loss.
B) make zero economic profit, that is, its owners make a normal profit.
C) make an economic profit of $4 million.
D) make an economic profit of $9 million.

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