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Applied Microeconomicseconomics-mcqs › applied-microeconomics
Published
2 Jun 2019
Last updated
28 May 2026

Browse all Applied Microeconomics MCQs

In country X, consumers can now purchase electricity from a gas provider and gas from an electricity supplier. What is this practice known as?

Multiple choice question for Applied Microeconomics. Select an option, then review the explanation below.

Choose the correct answer

Explanation

Option B is correct because allowing consumers to buy electricity from gas companies and gas from electricity companies promotes competition by making markets contestable. This differs from deregulation, which refers to reducing government controls, and other options like natural monopoly or cross-subsidization, which do not describe this scenario.

Practice related questions from the same subject.

  1. 1.According to the theory of the second best, when perfect competition is not present, what price should a privatized firm set?
  2. 2.What is the primary purpose of antitrust laws and market regulation in relation to competition?
  3. 3.How is the electricity sector structured in the UK in terms of market characteristics?
  4. 4.Why do sales representatives often promote the sale of extended warranties?
  5. 5.What type of merger involves companies that operate in completely different industries?

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