A Natural Monopoly Exists Whenever a Single Firm

question 183

Multiple Choice

A natural monopoly exists whenever a single firm:

• A) is owned and operated by the federal or local government.
• B) is investor owned but granted the exclusive right by the government to operate in a market.
• C) confronts economies of scale over the entire range of production that is relevant to its market.
• D) has gained control over a strategic input of an important production process.

Apply the high-low method to calculate variable and fixed cost components.

Understand the concept of the relevant range in cost behavior.

Use the contribution margin and contribution margin ratio in decision-making.

Understand and apply CVP analysis for business decision-making.

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Definitions:

Federalism

A political system in which power is divided between a central authority and constituent political units, such as states or provinces.

Great Compromise

An agreement made during the Constitutional Convention of 1787 that in part established a two-house legislature, combining elements of both proportional and equal representation.

Republic Ideology

The political doctrine that supports a form of government where representatives are elected by the people, and there is an emphasis on the rule of law.

American Revolutionaries

Refers to the colonists of the Thirteen American Colonies who rebelled against British control during the late 18th century, leading to the American Revolutionary War.