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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into four films of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices?

To determine

The effect on price of splitting up a local electrical utility that is a legal monopoly based on economies of scale into four firms of equal size.

Explanation

Since the monopoly is based on economies of scale, splitting up the company into four equal sized firms will increase the average cost of production...

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