Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to achieve the socially optimal allocation of resources, it will have to:





A.  tax the monopolist P 3 P 1 per unit to prevent the monopolist from realizing an economic

profit.

B.  subsidize the monopolist or the monopolist will go bankrupt in the long run.

C.  subsidize the monopolist P 1 P 4 per unit to allow the monopolist to break even.

D.  tax the monopolist P 1 P 2 per unit to prevent the monopolist from realizing an economic

profit.


B.  subsidize the monopolist or the monopolist will go bankrupt in the long run.

Economics

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Indicate whether the statement is true or false

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