Concerning public utilities,the stated reason for resorting to regulation of a monopoly,rather than promoting competition through antitrust,is that the industry in question is believed to be a
A)profit-maximizing monopoly.
B)producer of externalities.
C)revenue-maximizing monopoly.
D)natural monopoly.

Question

Quizplus · Accepted Answer

A natural monopoly is a situation where the industry has high fixed costs, such as utilities, making it difficult for new entrants to compete due to economies of scale. It is efficient to have one firm producing the goods or services in this case. Hence, regulation is favored over promoting competition through antitrust laws. Both A and C describe types of monopolies, but they do not necessarily apply to public utilities. B describes a situation that could warrant regulation, but it is not specific to public utilities.

Concerning Public Utilities,the Stated Reason for Resorting to Regulation of a Monopoly,rather