Which of the Following Statements Is False Regarding a Natural

question 96

Multiple Choice

Which of the following statements is false regarding a natural monopoly?

• A)The minimum efficient scale is larger than the size of the market.
• B)The average total cost declines over the entire range of output.
• C)One firm can supply the entire market at a lower cost than two firms can.
• D)Fixed costs are very large compared to variable costs.
• E)Diseconomies of scale exist at a very low output level.

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Definitions:

Incremental Sales

Additional revenues generated from a new marketing campaign, sales strategy, or any activity beyond normal operations.

Operating Expenses

Expenses related to the day-to-day operations of a business that are not included in the cost of goods sold, such as rent, salaries, and utilities.

Capital Budgeting

The process of planning and managing a company's long-term investments in projects or assets, evaluating potential returns and risks.

Straight-Line Depreciation

A method of calculating depreciation by evenly spreading the cost of an asset minus its salvage value over its useful life.