If the Distribution of Water Is a Natural Monopoly, Then

question 185

Multiple Choice

If the distribution of water is a natural monopoly, then

• A)a single firm cannot serve the market at the lowest possible average total cost.
• B)allowing for competition among different firms in the water-distribution industry is efficient.
• C)multiple firms would likely each have to pay large fixed costs to develop their own network of pipes.
• D)average cost increases as the quantity of water produced increases.

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