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It is usually asserted that public utilities such as electric companies and gas companies are natural monopolies, but an assertion is not proof. How would you go about trying to prove (or disprove) that electric companies and the like are (or are not) natural monopolies? ( Hint: Consider comparing the average total cost of a public utility that serves many customers with the average total cost of a public utility that serves relatively few customers.)

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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
Publisher: Cengage Learning
ISBN: 9781337617383
BuyFind

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
Publisher: Cengage Learning
ISBN: 9781337617383

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Chapter
Section
Chapter 25, Problem 12QP
Textbook Problem

It is usually asserted that public utilities such as electric companies and gas companies are natural monopolies, but an assertion is not proof. How would you go about trying to prove (or disprove) that electric companies and the like are (or are not) natural monopolies? (Hint: Consider comparing the average total cost of a public utility that serves many customers with the average total cost of a public utility that serves relatively few customers.)

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