Which describes a benefit from government regulation of a natural monopoly? A. After flooding destroys homes in a small town, rent goes up. B. Livy's gas utility bill does not go up during a natural gas shortage. C. The corn syrup in Marcus's candy was cheaper to use than sugar. D. Two lumber suppliers compete to offer the best price for paper mills.

Question

22-07-2016
Social Studies

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Which describes a benefit from government regulation of a natural monopoly? A. After flooding destroys homes in a small town, rent goes up. B. Livy's gas utility bill does not go up during a natural gas shortage. C. The corn syrup in Marcus's candy was cheaper to use than sugar. D. Two lumber suppliers compete to offer the best price for paper mills.

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andriansp andriansp · Answer 1 · 2018-07-20T11:00:42+02:00

I believe the answer is: B. Livy's gas utility bill does not go up during a natural gas shortage.

In a monopoly, only one establishment control all the price for a certain product in the market. So, during a shortage, that establishment can increase the price and the consumers would be forced to conform since there is no other competitors.

Government regulation would create price ceiling that determine the maximum price that a company could make for a certain product.