Refer to the Diagram for a Pure Monopolist

Multiple Choice

Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to achieve the socially optimal allocation of resources, it will have to

A) tax the monopolist P₃ P₁ per unit to prevent the monopolist from realizing an economic profit.
B) subsidize the monopolist or the monopolist will go bankrupt in the long run.
C) subsidize the monopolist P₁ P₄ per unit to allow the monopolist to break even.
D) tax the monopolist P₁ P₂ per unit to prevent the monopolist from realizing an economic profit.