Industry results in a natural monopoly

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1. Consider the market for railways. Railways have huge fixed costs and low and constant marginal costs. The result of the cost structure in this industry results in a natural monopoly. The natural monopoly results in which of the following outcomes?

a. Equilibrium occurs where price is equal to marginal cost.

b. Equilibrium occurs where price is equal to average cost.

c. Equilibrium occurs where marginal value is equal to marginal cost.

d. Equilibrium occurs where marginal revenue is equal to marginal cost.

e. Equilibrium occurs where total revenue is maximized.

Reference no: EM132559614

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