When confronted with a natural monopoly that restricts output and charges monopoly prices, the two methods that government have for promoting better outcome are:
a: public ownership and public regulation.
b: sole proproetorship and public goods.
c: antitruct law and horizontal mergers.
d: creative destruction and laissez-faire.

I will go for this by rejecting the options, from the last to the first
.
D: Creative destruction and laissez-faire. 

Laissez-faire would not help here, as it's the principle of non-involvement

C: Antitruct law and horizontal mergers.

Anti-trust law is good, but horizontal merger rather leads to monopoly!

B: Sole proprietorship and public goods.
-sole proprietorship can also be a monopoly, it means that the company belongs to one person

Which means that we're left with the answer A

The answer would be b.