Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

A) the existence of good heating substitutes.
B) economies of scale in electric heat generation.
C) prices for electric heat being set at the socially optimal level.
D) strict government regulation of the price charged for electric heat.

Price Discrimination

A method of pricing in which a provider charges different prices for virtually identical goods or services in different market areas.

Electric Heating

A system of converting electric energy into heat for warming indoor spaces, typically regarded as more efficient than traditional heating methods.

Heating Substitutes

Alternative heating sources that can replace the primary heating method, including electric heaters, solar heating, and geothermal heat pumps.