Limited Government Licenses That Create a Monopoly Do So Because

question 114

Multiple Choice

Limited government licenses that create a monopoly do so because

• A) the license generates a marginal cost advantage.
• B) the monopoly will become a natural monopoly.
• C) a barrier to enter the market exists.
• D) All of the above.

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Definitions:

Total Variable Costs

The sum of all costs that vary with the level of production, including materials and labor.

Total Variable Costs

The sum of all costs that vary directly with the level of production or output.

Total Fixed Costs

Expenses that do not change with the level of production or sales over a certain time period, such as rent or salaries.

Variable Input

A factor of production, such as labor or raw materials, whose quantity can be changed easily by a business to adjust to the level of output.