It has been proposed that natural monopolists should be allowed to determine their profit-maximizing outputs and prices, and then government should tax their profits away and distribute them to consumers in proportion to their purchases from the monopoly. Is this proposal as socially desirable as requiring monopolists to equate price with marginal cost or average total cost? Explain. multiple choiceYes, it is more socially desirable than equating price with average total cost.Yes, it has the same outcome as fair-return pricing.No, it does not consider that the output of natural monopolists would still be at the suboptimal level where P < MC.No, it does not consider that the output of natural monopolists would still be at the suboptimal level where P > MC.

A natural monopoly occurs when:Group of answer choicesthe monopolist product is an organic, pesticide-free product.firms are characterised by rising marginal-cost curves. average total cost of production increases as more output is produced. average total cost of production decreases as more output is produced  ,

Fill in the Blank QuestionFill in the blank question.If the objective of government is to achieve efficiency, it should establish a legal price for the monopolist that is equal to its marginal cost.

In a natural monopoly,Group of answer choicesif the government requires marginal cost pricing, it will likely have to subsidize the firm.the marginal revenue curve is horizontal.the marginal cost curve is positively sloped.society would be better off if antitrust laws were used to create many different firms in the market.

Monopolistic competition is characterized by firmsMultiple Choiceproducing differentiated products.making economic profits in the long run.producing at optimal productive efficiency.producing where price equals marginal cost.

If the government wants to regulate a natural monopoly it will force the firm to set price equal toGroup of answer choicesaverage cost.marginal cost.marginal revenue.None of the above.