In Natural Monopoly,AC Continuously Declines Due to Economies in Distribution

question 4

Multiple Choice

In natural monopoly,AC continuously declines due to economies in distribution or in production,which tends to found in industries which face increasing returns to scale.If price were set equal to marginal cost,then:

• A) price would equal average cost.
• B) price would exceed average cost.
• C) price would be below average cost.
• D) price would be at the profit maximizing level for natural monopoly
• E) all of the above

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Definitions:

Separation Threshold

The minimum distance or difference between stimuli detectable by the sensory system.

Response Threshold

It is the minimal amount of stimulus intensity required for a neuron to fire a response or for a specific response criterion to be met in behavior.

Psychophysics

The scientific study of the relationship between stimuli (which are physical) and the sensations and perceptions they produce in the observer.

Physical Energy

The capacity to perform work or to produce physical changes within the body or environment, stemming from physical or chemical resources.