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Author Question: What is a natural monopoly? Why is government justified in regulating a natural ... (Read 45 times)

cdr_15

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on: Jun 30, 2018
What is a natural monopoly? Why is government justified in regulating a natural monopoly?

Question 2

When quantities of two goods belong to the same indifference curve, which of the following is true?
 a. The combinations of the two goods along the indifference curve yield the same total utility.
  b. Prices of the two goods are equal.
  c. Marginal utilities of both goods are equal.
  d. The total utility of all combinations above the curve equal zero.


T4T

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Reply #1 on: Jun 30, 2018
Answer to Question 1

A natural monopoly is a monopoly that results from very extensive economies of scale. Government is justified in regulating a natural monopoly to ensure that the monopoly does not gouge consumers with unnecessarily high prices.

Answer to Question 2

a


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