If a natural monopoly like SMUD, with declining long run ATC, was forced to break up into several small competitive firms, the Price charged by the competitive firms should decrease as the firms become more efficient. Total production for the industry should increase because of the generated by increased competition.

If a natural monopoly like SMUD, with declining long run ATC, was forced to break up into several small competitive firms, the Price charged by the competitive firms should decrease as the firms become more efficient. Total production for the industry should increase because of the generated by increased competition.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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