When regulating a natural monopoly, setting price equal to marginal cost is not possible because

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    a natural monopoly has declining marginal and average cost total cost functions.
     price would be less than average total cost and the firm would shut down in the long run.
     the firm would not earn a fair rate of return on investment.
     All of the above.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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All of the above.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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