Economic theory suggests that a natural monopoly should be:
A) eliminated whenever it arises.
B) regulated to take advantage of economies of scale.
C) left alone to operate with excess capacity.
D) taken over by the government.

Question

Quizplus · Accepted Answer

Economic theory suggests that natural monopolies should not be eliminated as they can take advantage of economies of scale and provide lower costs to consumers. However, they are often regulated to prevent abuse of market power and ensure fair pricing. Leaving them alone with excess capacity or taking over by the government are not the most efficient solutions.

Economic Theory Suggests That a Natural Monopoly Should Be