Asked by Lawrence Woods on Jun 14, 2024
Verified
Public utilities
A) are primarily regulated natural monopolies.
B) are competitive firms.
C) experience only insignificant economies of scale in production.
D) are seldom regulateD.
Regulated Natural Monopolies
Companies that operate in a market with no competition due to high infrastructure costs, but their prices and services are regulated by the government to protect consumers.
Public Utilities
Companies that provide essential services such as water, electricity, and telecommunications to the public, usually subject to government regulation.
Economies of Scale
Cost advantages reaped by companies when production becomes efficient, as the scale of operations and output increases.
- Interpret the impact of public utilities and natural monopolies on economic processes.
- Understand the regulatory framework surrounding monopolies and public utilities.
Verified Answer
CE
Chiyan EllisJun 19, 2024
Final Answer :
A
Explanation :
Public utilities are typically natural monopolies, meaning that it is more efficient to have one provider of the service due to large economies of scale. However, because they are natural monopolies and often provide essential services like water and electricity, they are heavily regulated by government agencies to prevent abuse of power and ensure affordability for consumers.
Learning Objectives
- Interpret the impact of public utilities and natural monopolies on economic processes.
- Understand the regulatory framework surrounding monopolies and public utilities.