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Sagot :
Answer:
B and E
that's the two best ways to regulate a natural monopoly
Explanation:
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Best way that can be followed in regulations of natural monopoly are;
B:The government should impose a price ceiling at fair returns price so that the monopoly can cover costs.
E: The government should impose a price ceiling at the socially optimal price and subsidize any loss to cover costs.
- A natural monopoly can be regarded as a type of monopoly that exist in industry whereby there is high infrastructural costs as well as other barriers that obscure the entry of relative size of supplier to the market.
- In this market a single firm can supply the market even at lower cost even better that two or more other firms can do.
- To regulate this kind of Monopoly, there should be price ceiling by the government at a very fair return price.
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