-Refer to the diagram above.A regulatory agency can impose any of the following on the monopolist represented in this diagram EXCEPT
A) providing a subsidy for the monopolist.
B) setting the quantity of output produced by the firm.
C) setting the price charged by the firm.
D) setting the price charged by the firm as well as the quantity produced by the firm,without paying any subsidies to the firm.
E) imposing cost-plus regulation.

Question

-Refer to the diagram above.A regulatory agency can impose any of the following on the monopolist represented in this diagram EXCEPT
A) providing a subsidy for the monopolist. 
B) setting the quantity of output produced by the firm. 
C) setting the price charged by the firm. 
D) setting the price charged by the firm as well as the quantity produced by the firm,without paying any subsidies to the firm. 
E) imposing cost-plus regulation.

Quizplus · Accepted Answer

A regulatory agency cannot set both the price and the quantity without subsidies, as it would not allow the monopolist to cover costs and earn a normal profit.

-Refer to the Diagram Above