Question

When the government attempts to set the price at marginal cost through the force of regulation, a natural monopoly firm will likely lose money and go out of business unless ______________.

Answer 1

The government attempts to set the price at marginal cost through the force of regulation, a natural monopoly firm will likely lose money and go out of business unless the government offers the firm an ongoing public subsidy.

What is Government?

The governance structures that divide authority between the executive and legislative branches are referred to as the system of government. Governments are essential because they uphold law and order and  civilization to function.

Governments may provide cash, tax rebates, or other forms of financial assistance to particular businesses or sectors of the economy. Subsidies are intended to help or support areas that are seen as being important to the nation's economy or infrastructure.

Producers utilize subsidies to boost their profits. These are used to lower the cost of necessities for people on low incomes.

Learn more about the government, here:

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