How Should a Natural Monopoly Be Regulated Under the Social

question 23

Multiple Choice

How should a natural monopoly be regulated under the social interest theory of regulation?

• A) by setting price equal to the average cost of production
• B) by allowing a price that maximizes the profit of the natural monopoly
• C) by using a marginal cost pricing rule
• D) by subsidizing other producers to compete with the monopoly
• E) by using rate of return regulation

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