Why do governments regulate natural monopolies? To allow only certain consumers to have access to goods and services To have access to the resources when national security is at risk To prevent prices from rising too high and to increase efficiency

Government regulate natural monopolies to prevent prices from rising too high and to increase efficiency. A natural monopoly occurs when average costs are declining over the range of production that satisfies market demand which will cause a single firm to produce majority of the product demanded in the market at a cost lower than those of competing firms. That company thus has monopoly in the production of such product and can increase the price of the product. When government intervenes by means of regulation such as price caps or market allocation, they will help in regulating the prices to a level that is acceptable by both consumers and producers and also encourage more firms to produce thus increasing competitiveness and efficiency in that industry.