If regulators break up a natural monopoly into many smaller firms, the cost of production
A) will remain the same.
B) will fall.
C) will rise.
D) could either rise or fall depending on the elasticity of the monopolist's supply curve.

Question

Quizplus · Accepted Answer

Breaking up a natural monopoly into smaller firms may result in a duplication of resources and increased competition, which could ultimately lead to higher production costs for each individual firm.

If Regulators Break Up a Natural Monopoly into Many Smaller