If the Distribution of Water Is a Natural Monopoly, Then

question 494

Multiple Choice

If the distribution of water is a natural monopoly, then (i)
Multiple firms would likely each have to pay large fixed costs to develop their own network of pipes.
(ii)
Allowing for competition among different firms in the water-distribution industry is efficient.
(iii)
A single firm can serve the market at the lowest possible average total cost.

• A)(i) and (ii) only
• B)(ii) and (iii) only
• C)(i) and (iii) only
• D)(iii) only

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