When government regulations force a natural monopoly to produce where price equals average total cost,social welfare is _____

Question

Quizplus · Accepted Answer

When a government forces a natural monopoly to produce where price equals average total cost, it typically increases social welfare by reducing the monopoly's power to set prices above costs. However, this does not maximize social welfare due to potential inefficiencies in production and allocation.

When Government Regulations Force a Natural Monopoly to Produce Where