If Large Fixed Costs Result in ATC Falling as Output

question 52

Multiple Choice

If large fixed costs result in ATC falling as output increases and this occurs over the relevant range of output,this industry is a:

• A)constant-cost industry.
• B)natural monopoly.
• C)network externality.
• D)profit maximizer.

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Definitions:

Rational Behavior

Decision-making behavior that is consistent with logical or sensible choice, aiming to maximize personal advantage in terms of utility or profit.

Economic Actors

Individuals, households, businesses, and governments that make decisions about the allocation of resources and consumption of goods and services in an economy.

Systematic Mistakes

Errors that occur consistently as a result of a flawed system, process, or mechanism.

Statistical Probability

The likelihood of an event occurring, based on the analysis of numerical data.