Natural monopolies are mostly regulated industries because otherwise too many firms would enter the market and price would be driven too low for any firm to offer goods for a profit.
Answer the following statement true (T) or false (F)
False
Natural monopolies are regulated because it is more efficient for one firm to offer the goods because of strong economies of scale. Still, if the firm were not regulated, the monopoly would charge a price that is higher than marginal cost.
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An increase in demand for a good can be caused by
A) a decrease in the price of a substitute good. B) a reduction in income if the good is a normal good. C) a decrease in the price of a complementary good. D) an increase in price of a complementary good.
Which of the following statements about explicit costs is true?
A. They appear on the firm's balance sheet. B. They are the only costs that matter to business owners. C. They usually exceed implicit costs. D. They are difficult to measure.