Business

Yoselin Ramirez

30 June, 11:22

Suppose there is an actual natural monopoly in the electricity industry. in that case, the preferred method of regulating these industries should be

a. the marginal cost pricing because marginal cost is less than average cost and so the market price remains low.

b. marginal cost pricing because the natural monopolies will have no incentive to produce if price is equal to average cost.

c. average cost pricing because the firms will cover all their costs if the price is set equal to average cost.

d. marginal cost pricing because marginal cost is more than average cost and the firms make a higher profit.