Consider the Case of a Natural Monopoly with Falling Long-Run

Multiple Choice

Consider the case of a natural monopoly with falling long-run average costs.If regulation sets the price equal to marginal cost,then

A) the firm would operate at a loss and eventually go out of business.
B) shortages would result.
C) the demand curve would shift to the left.
D) the firm would earn economic profits.
E) the outcome would be allocatively inefficient.