Eliminating economic profit of a natural monopolist may be justifiable on the basis of society's equity goal.

Question

Quizplus · Accepted Answer

Natural monopolies have high barriers to entry due to economies of scale and other factors. This can lead to a situation where the monopolist can charge high prices and earn large profits, which can be seen as unfair to consumers. Eliminating economic profit through regulation or other measures may be seen as a way to promote equity and fairness in the market.

Eliminating Economic Profit of a Natural Monopolist May Be Justifiable