8
AssignmentMultiple Choice

Market Structures and Competition

Question 8 • 2102320-Economics HONORS - Edgenuity Teacher

Why do governments regulate natural monopolies?

Answer
A
to allow additional producers to enter a market
B
to prevent a monopoly from abusing its customers
C
to help lower the costs of production or distribution
D
to provide companies with greater access to raw materials

Explanation

A natural monopoly exists when one provider can serve the market more efficiently than multiple competing providers, often because of high infrastructure costs. Without competition, that provider may charge excessive prices or offer poor service. Governments regulate natural monopolies to protect customers from this abuse, so the correct choice is “to prevent a monopoly from abusing its customers.”

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