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The Government of a State Wants Gigantic Software Corp

Question 53

Multiple Choice

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.

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