Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to

A) a higher price.
B) decreased consumer surplus.
C) the elimination of economic profit.
D) less output.

Average Cost Pricing

A pricing strategy where the price is set based on the average cost per unit produced, including fixed and variable costs.

Profit-Maximizing

The process of increasing financial gain to the highest possible level given the constraints of the market.

Economic Profit

The difference between a firm's total revenue and its opportunity costs, including both explicit and implicit costs.