If the government wants to regulate a natural monopoly, it will ...

[biggirl4568]

If the government wants to regulate a natural monopoly, it will force the firm to set price equal to
 
  A) average cost.
  B) marginal cost.
  C) marginal revenue.
  D) None of the above.

Question 2

Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at 0.20 per pound when 500 pounds are grown. If the long-run supply curve is horizontal, then
 
  A) some firms will enjoy long-run profits because they operate at minimum average cost.
  B) the long-run price will be 0.20 per pound.
  C) each consumer will purchase 100 worth of potatoes.
  D) the long-run price will be set just above 0.20 per pound.

[fdliggud]

Answer to Question 1

A

Answer to Question 2

B