If the Economies of Scale Are Large Enough, Average Cost

question 91

Multiple Choice

If the economies of scale are large enough, average cost for a natural monopoly can be:

• A) higher than the average cost under competition.
• B) lower than the average cost under competition.
• C) higher than the price of the natural monopoly.
• D) higher than the price under competition.

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Definitions:

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response which is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Trial and Error

Trial and error is a fundamental method of solving problems characterized by repeated, varied attempts which are continued until success, or until the agent stops trying.

Unlearned

Pertaining to behaviors or reactions that are innate and not acquired through learning or experience.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, emphasizing the impact of consequences on future behavior.