Using antitrust law to split up an unregulated natural monopoly into several competing firms:
A) would reduce product price.
B) would increase product price.
C) might either increase product price or reduce product price.
D) will reduce average total cost.

Question

Quizplus · Accepted Answer

It is difficult to predict the effect of splitting up a natural monopoly as it depends on various factors such as the market structure and the level of competition that emerges. While splitting up could create competition and lead to lower prices, it could also result in inefficiencies and higher costs for the individual firms. Ultimately, the impact on product price could go either way.

Using Antitrust Law to Split Up an Unregulated Natural Monopoly