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Disha Sunil Laungani
on Dec 12, 2024

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Regulating "natural monopolies" according to the "rate of return" criterion is likely to

A) increase the monopolist's incentive to minimize cost.
B) increase output compared to the situation where the firm is unregulated.
C) completely eliminate the "welfare loss" due to monopoly.
D) do all of the above

Rate of Return

The rise or fall in an investment's worth over a designated period, articulated as a percentage of the cost of the investment.

Natural Monopolies

Natural monopolies occur in industries where the costs of production are lowest when a single firm supplies all the output, such as utilities companies.

Welfare Loss

The decrease in economic efficiency that occurs when the optimal allocation of resources is not achieved, leading to a loss of total welfare.

  • Understand the regulatory difficulties and methods related to natural monopolies.
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Chris QuirkDec 15, 2024
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