Question

When the government picks a price for the natural monopolist where the demand curve intersects the monopolist’s long-run average cost curve, it is known as;

Answer 1

Average-cost pricing

Step-by-step explanation:

Governments use average-cost pricing as a method of regulating pricing in the market. The reason for this is that monopolists often produce a less-than-optimal quantity at high pricing. The effects of this regulation could include: increased production at lower pricing, more efficient resource allocation and normal profits for the monopolist.