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Chapter 11: Q. 9 (page 272)

Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology required having a wire running to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)

What are some of the benefits of the deregulation?

Short Answer

Expert verified

Increased consumer choices.

Step by step solution

01

Step1. Concept 

A natural monopoly comes into play in areas like public utilities. They essentially serve the function of catering to large number of buyers alone so as they can make use of economies of scale and hence cut down cost of production.

02

Step2. Explanation 

Deregulation leads to entry of new firms which increases the competition in the market. Increased supply in the market broadens the choices available to consumers. Increased competition in market further improves the quality of service and reduce prices.

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Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology required having a wire running to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)

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