Using antitrust law to split up an unregulated natural monopoly into several competing firms
A) would reduce product price.
B) would increase product price.
C) might either increase product price or reduce product price.
D) would reduce average total cost.

Question

Quizplus · Accepted Answer

Splitting up a natural monopoly into several competing firms may create inefficiencies and increased costs associated with duplication of infrastructure and equipment. However, competition typically leads to lower prices as firms strive to attract customers with lower prices and higher quality products. Therefore, it is possible that the outcome of splitting up a natural monopoly could either lead to lower or higher product prices depending on how the market adjusts to increased competition.

Using Antitrust Law to Split Up an Unregulated Natural Monopoly