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Choose the two BEST ways to regulate a natural monopoly.
A)
The government should not get involved so that free market demand and
supply is established.
B)
The government should impose a price ceiling at fair returns price so that
the monopoly can cover costs.
The government should impose a tax on these big business entities to
decrease price and decrease their output.
D)
The government should impose a per unit tax on output so that consumers
will offset the costs for the supplier.
E)
The government should impose a price ceiling at the socially optimal price
and subsidize any loss to cover costs.

Sagot :

Remabernasjoaquinidn

Answer:

B and E

that's the two best ways to regulate a natural monopoly

Explanation:

HAVE A GOOD DAY

Ayfat23idn

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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