Utility price and profit regulation is based on the perception of:

Question

Quizplus · Accepted Answer

Utility price and profit regulation is based on the perception of natural monopoly, where one single firm can provide a good or service at a lower cost than any potential competitor. This creates a market failure with the potential for a monopolist to charge excessively high prices, leading to consumer exploitation. Therefore, regulation aims to ensure that the monopolist does not abuse their power by setting reasonable prices while still earning a fair profit. Externalities, diseconomies of scale, and consumer surplus are also important concepts in economics but are not directly related to utility regulation.

Utility Price and Profit Regulation Is Based on the Perception