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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
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