Question

 

Public policy toward monopolies Suppose that a government that is skeptical of efforts to regulate prices charged by private companies is nevertheless concerned that an electric utility company is taking advantage of consumers with unfair pricing policies .

 

Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?

• Do nothing at all.
• Turn the company into a public enterprise.
• Regulate the firm's pricing behavior.
• Use antitrust laws to increase competition.

Answer 1

Option B is correct.

When a company starts exploiting the consumer, the government must turn that company into a public enterprise as the organization wholly or partly owned by the state and controlled through a public authority. Through this conversion, the government will be able to achieve its objective and consumer is not to be exploited.

Answer 2

Ans - turn the company into a public enterprise.

Monopoly- it is a that market situation where there is a single firm selling the commodity.there is just one firm ,no competition,no free entry and exit of a new firm.

There are four ways in which government can respond where there is a problem in Monopoly.

1. Doing nothing at all
2. Regulate the firm price behaviour
3. Turning the monopolies into public enterprise
4. Use antitrust laws to increase the competition.

So the correct answer is - turn the company into public enterprise.