Consider the Following Information for a Regional Cable Television Service

Multiple Choice

Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve.(Assume the service provided is basic cable and units are household connections.) - minimum LRAC = $9.00 per month
- minimum efficient scale = 2 million units
- current output = 1.7 million units
- current LRAC = $10.25 per month
Suppose the firm is currently being regulated and is required to follow a marginal-cost pricing policy.The price of the service will be ________ per month.

A) lower than $9.00
B) $9.00
C) lower than $10.25
D) $10.25
E) higher than $10.25