Question

The best regulatory response when there is solid evidence that an industry is no longer a natural monopoly and scale economies are limited?

Full Deregulation

Partial Deregulation

Continue Price & Entry Regulation

Answer 1

Option C.

• Continuous price and entry regulation is the best regulatory response when there is solid evidence that an industry is no longer a natural monoply and scale economies are limited.
• Regulatory response defines the level of control a busines has in a market.
• When a market is no longer a natural monopoly, it must be under continuous price and entry regulation as the new firms can enter the market and change their quantity, quality and prices of their goods according to their wish which limits their scale economies.
• Hence to control the number of firms entering the Market and the prices set by them, the markets must undergo continuous price and entry regulation.