Which is not true of state owned and managed natural monopolies?
a. The state is better able to price at MC because it can use its taxing power to cover the losses that result from marginal cost pricing.
b. X-inefficiency is common because the incentives for profit are miss¬ing.
c. Bureaucrats frequently maximize the operating budgets of their departments rather than function with a profit-maximization objective.
d. The wise state government will set price equal to average total cost so that losses will not have to be borne by the taxpayer.
Answer: d. The wise state government will set price equal to average total cost so that losses will not have to be borne by the taxpayer.