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21 March, 05:37

Policymakers are discussing various proposals regarding how to deal with natural monopolies. Senator Huff wants to regulate natural monopolies by equating price with average total cost. Huff contends that such a policy will ensure that monopolies make every effort to reduce costs. Senator Puff wants the government to own natural monopolies. Puff argues that government-owned monopolies usually do a better job of holding down costs than privately owned monopolies. Which senator's argument is correct?

a. Senator Huff

b. Senator Puff

c. both senators

d. neither senator

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  1. 21 March, 05:49
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    Answer: the correct answer is d. neither senator

    Explanation:

    The idea of equating price with average total cost doesn't take into account the profits and I don't think companies would accept that.

    The other idea is a fallacy because government-owned monopolies are often

    inefficient.
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