A Natural Monopoly Occurs When

question 102

Multiple Choice

A natural monopoly occurs when

• A) long-run average costs decline continuously through the range of demand.
• B) a firm owns or controls some resource essential to production.
• C) long-run average costs rise continuously as output is increased.
• D) economies of scale are obtained at relatively low levels of output.

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Definitions:

Income Effect

The change in consumer's purchasing behavior due to a change in their income, affecting how much of a product they buy.

Tax Revenues

The income that is gained by governments through taxation, used to fund public services, infrastructure, and government obligations.

Government Expenditures

The total amount of money spent by the government in a certain period, including spending on public services, social security benefits, and infrastructure projects.

Monetary Policy

The actions of a central bank or other regulatory authority that determine the size and growth rate of the money supply, which in turn affects interest rates.