When a monopoly is created through government franchise,
A)the firm is assured of above-normal profit
B)it is subject to government price regulation
C)the firm will discontinue any rent-seeking activity
D)price discrimination is forbidden
E)the government prevents both entry and exit in the long run

Question

Quizplus · Accepted Answer

A government franchise monopoly is often subject to government price regulation to prevent the firm from exploiting its monopoly power by charging excessively high prices.

When a Monopoly Is Created Through Government Franchise