BSA 2.

1A
Managerial Economics
09 Seatwork
MERALCO OVERPRICE UNJUST, SAYS GROUP
1. What type of monopoly is Meralco? Explain your answer.
 Meralco is a natural monopoly, serving a densely populated market with millions of customers.
Accessing it is challenging for rivals because of its vast network and infrastructure. If the government
doesn't step in, increases in prices might result from the absence of real competition. In order to
preserve Meralco's position in the market and stop abuse of it, government oversight is frequently
required.

2. What inefficiencies does the over recovery impose on the market?

 When a business makes more money than it needs to in order to pay its expenses and turn a profit,
this is referred to be over recovery. Innovation and economic advancement may be delayed as a result
of poor resource allocation. Additionally, it may raise obstacles to entry for new rivals, which would
limit the options available to consumers and their potential gains. Policymakers and regulators must
closely monitor markets to prevent excessive profits from hindering economic growth and consumer
welfare.
3. Aside from the government directive, what can be done to prevent Meralco from overcharging?
 To prevent Meralco from overcharging, as a way to protect consumer interests and advance a more competitive
and efficient energy industry, a comprehensive plan that incorporates greater market competition,
transparency, and consumer empowerment is required.