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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Definitions:

Concurrent Federal Jurisdiction

The situation where both federal and state courts have the authority to hear and decide cases on the same issues.

Admiralty

Relating to maritime law, which governs nautical issues and private maritime disputes.

Treaties

Formal agreements between two or more sovereign states governed by international law.

Antitrust

Legislation enacted to increase competition in the marketplace by preventing monopolies, anti-competitive practices, and other unfair business tactics.