What Is Most Likely to Happen as the Output of a Natural

question 231

Multiple Choice

What is most likely to happen as the output of a natural monopoly increases over the range of market demand?

• A) There is a small decrease in average total cost and then it increases as output increases.
• B) There is an increase in average total cost and then it decreases as output increases.
• C) Average total cost increases as output increases.
• D) Average total cost decreases as output increases.

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Definitions:

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Power Plants

Facilities that generate electricity by converting various forms of energy, such as fossil fuels, nuclear power, or renewable sources, into electrical power.

Geothermal Energy

A renewable energy source derived from the natural heat produced inside the earth, used for heating and electricity generation.

Hot Water

Water that has been heated, typically used for bathing, cleaning, and cooking.