Question: Explain verbally and graphically how price (rate) regulation may improve the performance of monopolies. In your answer distinguish between (a) Socially optimal (marginal-cost) pricing (b)

Explain verbally and graphically how price (rate) regulation may improve the performance of monopolies. In your answer distinguish between

(a) Socially optimal (marginal-cost) pricing

(b) Fair-return (average-total-cost) pricing. What is the “dilemma of regulation”?


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