Natural Monopolies

question 163

Multiple Choice

Natural monopolies:

• A) produce the optimal quantity of output, unlike other monopolies.
• B) exist when one firm can produce the market output at a lower cost than two or more firms.
• C) generally experience large diseconomies of scale, leading to production inefficiencies and work stoppages.
• D) face market demand curves that are perfectly elastic.

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Definitions:

Inverse Demand

A mathematical representation of demand that expresses price as a function of quantity demanded, typically showing how the price will adjust to achieve market equilibrium.

Cournot Duopolists

Firms in a duopoly (a market with only two producers) following Cournot competition, where each firm decides its production level assuming the other's decision as given.

Total Cost

The complete cost of producing a specific number of goods or services, including both fixed and variable costs.

Bean Sprouts

Edible sprouts derived from the germination of beans, commonly used in Asian cuisine.