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Phoenix Electricity is the only company providing electricity in City H.
1. What kind of market structure should be used to analyze Phoenix Electricity's production decision?
2. Suppose Phoenix Electricity relies heavily on natural gas but there is a drastic increase in the price of natural gas recently. How does this affect the output and price of Phoenix Electricity? Show the results with the aid of a diagram.
3. Will Phoenix Electricity earn a larger or a smaller amount of profit? Use words only to explain your answer.
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