The government often allows only one company to provide electricity in a given geographic area because allowing several companies to do so would result in an inefficient duplication of infrastructure.What does this suggest about electric utilities?
A)they are natural monopolies
B)they are oligopolies
C)they are duopolies
D)they are pure players

Question

Quizplus · Accepted Answer

The fact that only one company is allowed to provide electricity in a given geographic area suggests that electric utilities are natural monopolies. This means that it is more efficient to have one company provide the service due to the high fixed costs and economies of scale involved in building and maintaining the necessary infrastructure.

The Government Often Allows Only One Company to Provide Electricity