The Rail System in Metropolis Is a Natural Monopoly

question 58

Multiple Choice

The rail system in Metropolis is a natural monopoly.Which of the following is likely to be true if the government regulates the system by setting a competitive price?

• A)Price and output will be higher in a regulated monopoly than in an unregulated monopoly.
• B)Price and output will be lower in a regulated monopoly than in an unregulated monopoly.
• C)Price will be lower and output will be higher in a regulated monopoly than in an unregulated monopoly.
• D)Price will be higher and output will be lower in a regulated monopoly than in an unregulated monopoly.
• E)Profit will be lower in a regulated monopoly than in an unregulated monopoly, but there will be no change in output.

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