The government of a state wants Gigantic Software Corp.,a natural monopoly,to stay in business yet still produce where price equals marginal cost.In order to encourage Gigantic Software Corp.to stay in business,the government might choose to _____
A) set a price ceiling 10 percent lower than its previous level.
B) impose a tax on the company for each dollar of sales.
C) establish regulations that raise the company's cost of doing business.
D) provide a subsidy to the company to cover the loss and ensure a normal profit.
E) replace the company's top management.
Correct Answer:
Verified
Q48: Production by a monopolist would result in
Q49: Exhibit 15.4 Q50: A regulated natural monopoly that must set Q51: Exhibit 15.3 Q52: Governments often enact regulations that benefit producers Q54: Suppose the market for taxis in Mexico Q55: A natural monopolist earns zero economic profit Q56: Which of the following is true of Q57: If an electric company is allowed by Q58: According to the special interest theory,the licensing
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