Question: 1. a. Suppose that an unregulated electric utility is a government franchised, profit-maximizing monopoly. At the prevailing price of electricity, an practical study indicates that

1.a. Suppose that an unregulated electric utility is a government franchised, profit-maximizing monopoly. At the prevailing price of electricity, an practical study indicates that the price elasticity of demand for electricity is -0.8. Something is wrong. What? Explain.(3 Marks)

b.Explain two main reasons for government participation in economic activities in a country.(2 Marks)

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