Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In a particular country, there is only a single natural gas provider. Due to a government anti-trust regulation, this natural gas provider has been forced

In a particular country, there is only a single natural gas provider. Due to a government anti-trust regulation, this natural gas provider has been forced to price so that at least 90% of the country will buy gas. One negative side effect of this regulation is that the provider's quality of service is very low. One year, the country decides to deregulate the natural gas provider and allow them to price as they desire. As a result, the provider raises prices substantially and collects higher profits than before. Which of the following can be concluded about the natural gas provider? The quality of the service provided must have improved or customers would not have been willing to pay the higher price. The provider was originally pricing where marginal revenue was higher than marginal cost. The provider was originally pricing where marginal revenue was lower than marginal cost. The demand curve must have been upward sloping for profits to increase despite the provider losing customers

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Math For Business And Finance An Algebraic Approach

Authors: Jeffrey Slater, Sharon Wittry

1st Edition

0077639626, 9780077639624

More Books

Students also viewed these Economics questions

Question

Explain how religious attitudes affect firm behavior.

Answered: 1 week ago