A Natural Monopoly Is Defined as an Industry in Which

question 128

Multiple Choice

A natural monopoly is defined as an industry in which one firm

• A) can produce the entire industry output at a lower average cost than a larger number of firms could.
• B) can produce the entire industry output at a lower marginal cost than a larger number of firms could.
• C) is very large relative to other firms that could enter the industry.
• D) can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.

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Definitions:

Quantity Demanded

Quantity demanded is the total amount of a good or service that consumers are willing and able to purchase at a specific price level, at a given time.

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and quantities.

Usury Laws

Regulations that set the maximum interest rate that can be charged on loans, intended to protect consumers from excessively high rates.

Rent Control

Government policies or laws that limit the amount landlords can charge for leasing a home or renewing a lease to protect tenants from sharp increases.