1. Why is an electric company in a city often considered to be a natural monopoly? What would happen if two competing electric companies were established? How about telephone companies? How can changes in technology affect your answer?
2. Suppose that a 20 percent cut in the price of coastto-coast telephone calls brings in so much new business that it permits a long-distance telephone company to cut its charges for service from Chicago to St. Louis, but only by 2 percent. In your opinion, is this practice equitable? Is it a good idea or a bad one?
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