In which of the following ways can the government increase social welfare in an unregulated monopoly?

Question

Quizplus · Accepted Answer

In an unregulated monopoly where the monopolist has full control over the price and output, the government can increase social welfare by forcing the monopolist to lower the price and increase the output. This can be done through antitrust laws, regulation, or price controls. By doing so, the government can improve consumer welfare and ensure that the benefits of the market are more widely shared. Allowing the monopolist to maximize profit (choice A) would likely result in higher prices and lower output, worsening social welfare. Forcing the monopolist to shut down operations (choice C) would eliminate the market entirely, which may not necessarily be desirable, as it could create other economic and social problems. Providing tax exemptions to the monopolist (choice D) or increasing corporate tax rates (choice E) would have little effect on the monopolist's behavior and are therefore unlikely to improve social welfare.

In Which of the Following Ways Can the Government Increase