Question

Why is it in the best interest of the government to regulate natural monopolies?

To allow multiple suppliers access to the market
To gain a share of the profits of the monopoly
To keep costs to a minimum for consumers
To prevent surplus goods and services

Answer 1

To keep costs to a minimum for consumers is it in the best interest of the government to regulate natural monopolies
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Answer 2

To keep costs to a minimum for consumers

Step-by-step explanation:

Natural monopolies are market structures where fixed costs are high and variable costs and marginal costs are low, eg electricity distribution and public transport. Thus, state production or private production under government regulation becomes necessary to maintain minimum costs to consumers, since the unregulated natural monopoly will generate a smaller quantity and a higher price.