The Average Cost Curve of a Natural Monopoly

question 39

Multiple Choice

The average cost curve of a natural monopoly

• A)is upward-sloping.
• B)is downward-sloping.
• C)is horizontal.
• D)has an inverted U-shape.
• E)is vertical.

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Definitions:

Entry Barriers

Obstacles that make it difficult for new competitors to enter an industry or market.

Regulatory Standards

Specifications and guidelines established by authorities designed to ensure products, services, and actions meet required safety, quality, and performance criteria.

Competitive Price-searcher Market

A market structure where firms set their own prices because products are differentiated, giving them some degree of pricing power.

Average Total Cost

The cost per unit produced, found by taking the total production costs and dividing it by the quantity of items produced.