To Maximize Profit,a Natural Monopolist Produces the Level of Output

question 33

Multiple Choice

To maximize profit,a natural monopolist produces the level of output at which

• A)Price equals marginal cost.
• B)Price equals average total cost.
• C)Marginal revenue equals marginal cost.

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Definitions:

Direct Materials

The raw materials that can be directly traced to the production of a specific product.

Direct Labor

The wages and other costs for labor that is directly involved in the production of goods or services.

Fixed Overhead

Regular, unchanging costs that a business incurs, regardless of the level of production or sales activity, such as rent and salaries.

Direct Labor

The work of employees that can be directly attributed to the production of goods or services.