Fill in the blanks to make the following statements correct. a. The term natural monopoly refers to an industry in
a. The term natural monopoly refers to an industry in which only a single firm can operate at its
b. A regulated natural monopoly that is forced to set its price equal to marginal cost will earn ______ if its long-run average costs are falling.
c. A regulated natural monopoly that is subject to average-cost pricing and operating on the downward-sloping portion of its LRAC curve will earn ______ profits. Since price ______ marginal cost, this outcome will not be allocatively efficient.
d. Marginal-cost pricing for a natural monopoly is an efficient pricing system, but it leads to ______ for the firm if average costs are falling.
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Question Posted: December 22, 2015 02:49:01