The figure below shows the cost and revenue curves for a natural monopolist. Suppose the monopolist was originally producing at a profit-maximizing output level. If regulators set price equal to marginal cost, the price will change from:

figure 15.1

a. $14 to $20, and quantity will increase from 5 units to 8 units.

b. $24 to $18, and quantity will remain unchanged.

c. $24 to $18, and quantity will increase from 5 units to 8 units.

d. $24 to $22, and quantity will increase from 5 units to 10 units.

e. $18 to $14, and quantity will increase from 5 units to 8 units.