In a natural monopoly, which pricing strategy is often recommended to ensure efficiency and consumer welfare?

In a natural monopoly, the recommended pricing strategy is often called "marginal cost pricing. " This means that the company should charge a price equal to the cost of producing one more unit of the product. This approach helps ensure that the price reflects the true cost of providing the service, which can encourage efficient use of resources. For example, if a water company can supply an extra gallon of water for just 50 cents, charging that amount helps consumers only pay for what it really costs to produce. By using this pricing strategy, the monopoly can provide services at a fair price while still covering its costs, benefiting both the company and the consumers.