Natural monopolies tend to favor consumers by providing better pricing and greater innovative technologies.TrueFalse

​Monopolies will tend to produce a greater quantity and charge higher prices than perfectly competitive industries.Group of answer choicesTrueFalse

Governments promote and regulate natural monopolies in order to:A.maximize profits on goods that all citizens buy.B.discourage new businesses from forming.C.take on the costs of providing essential services.D.compete with the private sector producing consumer goods.

Monopolies are socially inefficient because the price they charge isGroup of answer choicesabove marginal cost.above demand.equal to demand.equal to marginal revenue.

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.

Which of the following is not a possible source of natural monopoly?Multiple Choicelarge-scale network effectssimultaneous consumptiongreater use of specialized inputsrent-seeking behaviour