Which of the Following Is a Characteristic of a Natural

question 369

Multiple Choice

Which of the following is a characteristic of a natural monopoly?

• A)Average cost exceeds marginal cost over large regions of output.
• B)Increasing the number of firms increases each firm's average total cost.
• C)One firm can supply output at a lower cost than two firms.
• D)All of the above are correct.

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Definitions:

Statistical Evidence

Data collected and analyzed for the purpose of supporting a conclusion or hypothesis.

Step-Variable Cost

The cost of a resource that is obtained in large chunks and that increases and decreases only in response to fairly wide changes in activity.

Contribution Margin

It is the difference between the sales revenue of a product and its variable costs. The contribution margin represents the portion of sales revenue that is not consumed by variable costs.

Behaviour

The actions or reactions of a person or system in response to external or internal stimuli.