-If the Natural Monopoly Shown in the Figure Above Is

question 531

Multiple Choice

-If the natural monopoly shown in the figure above is unregulated, it will make an economic profit of

• A) $2 million.
• B) $4 million.
• C) $9 million.
• D) $0, that is, it earns a normal profit.

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Definitions:

Fixed Monthly Expenses

Costs that do not vary from month to month, such as rent, loan payments, and insurance premiums.

Contribution Format Income Statement

An income statement format that separates fixed and variable costs to highlight the contribution margin of a business.

Unit Sales

The total number of individual units of a product sold by a company within a specific period of time.

Sales Commissions

The portion of sales revenue paid to sales employees or agents, usually calculated as a percentage of the sales they generate.