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Ierofanga [76]
3 years ago
8

"Let's assume that the government decides to regulate a natural monopoly by forcing them to produce at a point where the natural

monopoly's demand curve intersects average cost. In this case, the price will __________ and the quantity will ________ when compared to the natural monopoly if it were allowed to operate unregulated."
Business
1 answer:
SOVA2 [1]3 years ago
3 0

Answer: fall; rise

Explanation:

A natural monopoly is a form of monopoly that has a high cost, huge capital base and also a strong economies of scale.

If the government decides to regulate a natural monopoly by forcing them to produce at a point where the natural monopoly's demand curve intersects average cost.

This will lead to a fall in price and there will be a rise in quantity when compared to the natural monopoly if it were allowed to operate unregulated."

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