Electric utilities are often considered natural monopolies and are regulated
When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?
The price would be highest if the utility was left unregulated and could set the profit-maximizing price. The price is lowest if the utility is regulated using a marginal cost pricing rule.
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Why does even a free market economy need some government intervention?
a. to provide for things that the marketplace does not address b. to ensure that the government has the freedom to tax as necessary c. to make sure that the government can fulfill its needs for military personnel d. so that the government has some control over factor resources
In oligopolistic markets: a. there are a large number of sellers
b. firms are large relative to the size of the market. c. there are insignificant barriers to entry. d. firms have no perceptible influence over the market price.