In view of the problems involved in regulating natural monopolies, compare socially
Chapter 21, Problem 10(choose chapter or problem)
In view of the problems involved in regulating natural monopolies, compare socially optimal (marginal-cost) pricing and fair-return pricing by referring again to Figure 12.9. Assuming that a government subsidy might be used to cover any loss resulting from marginal-cost pricing, which pricing policy would you favor? Why? What problems might such a subsidy entail? LO21.3
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