In theory, placing a price control on a natural monopoly should:
A)have the same outcome as public ownership.
B)create negative economic profits for the company.
C)reduce deadweight loss to zero.
D)be implemented in conjunction with quantity controls.

Question

Quizplus · Accepted Answer

A price control on a natural monopoly will create negative economic profits for the company, as the price will be set below the profit-maximizing level. This will lead to a reduction in output and an increase in deadweight loss.

In Theory, Placing a Price Control on a Natural Monopoly