If government regulators guarantee a natural monopolist that it will earn normal profits, then the monopolist will Group of answer choices

If government regulators guarantee the natural monopolist that it will earn a normal profit, then, the monopolist will not have any incentive to hold down costs.

Explanation:

Normal profits are the profits that allow a business to cover its total costs: both explicit costs and implicit costs. Explicit costs are those that have to be paid explicitely, for example: rent or wages, while implicit costs are the opportunity costs of not running a business.

If the natural monopolist has a government guarantee that it will always make a normal profit, then, it will not have any incentive to reduce costs, whether explicit costs or implicit costs.

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