It Is Unrealistic to Regulate a Natural Monopoly at Marginal

question 56

Multiple Choice

It is unrealistic to regulate a natural monopoly at marginal cost pricing because

• A) the government is not allowed to regulate markets.
• B) marginal cost pricing ends up having the natural monopoly firm earn zero economic profits.
• C) with this type of regulation,the firm will want to shut down,and that outcome is not desirable for society.
• D) regulating a market causes more deadweight loss.
• E) firms do not need to follow regulations from the government.

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