Which of the Following Is a Criticism of Average-Cost Pricing

Multiple Choice

Which of the following is a criticism of average-cost pricing as a regulatory response to a natural monopoly?

A) With average-cost pricing, output produced is smaller than the efficient level of output.
B) Firms that practice average-cost pricing suffer persistent losses.
C) Imperfect information about the firm's costs reduces the effectiveness of average-cost pricing.
D) Under average-cost pricing, the market price is lower than the efficient price.
E) Answers with average-cost pricing, output produced is smaller than the efficient level of output and imperfect information about the firm's costs reduces the effectiveness of average-cost pricing are both correct.