6
AssignmentMultiple Select

Market Structures and Competition

Question 6 • * HSA 26-27 Economics

How could a government regulate a natural monopoly? Check all that apply.

Answer
A
It could buy out the company and operate it instead.
B
It could limit how much the company charges customers.
C
It could force the company to offer a different good or service.
D
It could insist a company get approval before making certain decisions.
E
It could set up new companies to introduce competition into the market.
F
It could split the company into smaller firms that serve different customers.

Explanation

A government can regulate a natural monopoly by taking ownership and operating it, limiting the prices it charges, or requiring approval for certain business decisions. These correspond to public ownership and oversight by a regulatory agency. Creating competing firms or splitting the company may undermine the cost savings that make a natural monopoly efficient, while forcing it to offer a different service is not a standard way to regulate it.

AI-written and checked against the verified answer.

Previous
Next