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The problem with socially optimal pricing regulation of a natural monopoly is that?

Sagot :

The problem with socially optimal pricing regulation in a natural monopoly is the price ceiling which is set based on the marginal cost, incurring a huge dead weight on the economies.

To establish a socially optimal price for a natural monopoly, the government must select the price at which the marginal cost curve intersects the demand curve. But, for a better competition and higher availability of goods, a price ceiling is set based on fair return price, helping the monopoly to make normal profit.

Learn more about Socially optimal pricing here:

https://brainly.com/question/15176802

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