If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand
A) the firm would earn monopoly profits. B) the firm would incur a loss.
C) economic efficiency would not be achieved. D) the firm would break even.
Question 2
Refer to Figure 14-8 Use the decision tree to determine whether Microsoft should deter Toshiba from entering the market for electronic book readers (e-readers). Assume that each firm must earn a 20 return on investment to break even.
Explain Microsoft's decision process.