A local electric company that,without government regulation,restricts output and raises price without fear of competition is a typical example of:

Question

Quizplus · Accepted Answer

A local electric company that restricts output and raises prices without fear of competition is an example of a natural monopoly. This is because the high fixed costs involved in producing electricity make it more efficient and cost-effective for only one company to serve the entire market. Without government regulation, this natural monopoly can abuse its market power by restricting output and raising prices without fear of losing customers to competitors.

A Local Electric Company That,without Government Regulation,restricts Output and Raises