Chapter 62, Problem 3MCQ

To determine

Government’s most common action in a natural monopoly in Country U.

Answer to Problem 3MCQ

(c) Use price regulation.

Explanation of Solution

In Country U, Under the natural monopoly, the government handover the industry to the private owners but the government regulated the price that private owners can charge for essential goods and services. Hence, option (c) is correct and options (a), (b), (d), and (e) is incorrect.

Economics Concept Introduction

Public ownership is the best practice of natural monopoly in which government regulates the market through price regulation of produces itself to bring efficiency in the market rather than private monopoly.