Often natural monopolies are regulated by:
a. setting the price equal to marginal cost, even if marginal cost is less than average total cost.
b. setting the price equal to average total cost, so as to maximize consumer surplus and allow the firm to break even.
c. having the firm produce the quantity at which marginal revenue equals marginal cost.
d. having the firm produce the quantity at which marginal revenue equals average total cost.
Ans: b. setting the price equal to average total cost, so as to maximize consumer surplus and allow the firm to break even.
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