A Natural Monopoly Exists When

question 162

Multiple Choice

A natural monopoly exists when:

• A)a few firms collude to make one large firm.
• B)economies of scale provide large cost advantages to having one firm produce the industry's output.
• C)firms naturally maximize profit regardless of market structure.
• D)firms enter the industry as a result of profit incentives.

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Definitions:

Observations

Elements of a sample or population that have been collected and can be analyzed statistically.

Normal Population

A statistical population where the data points are distributed evenly around the mean, typically forming a bell-shaped curve known as a normal distribution.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, often denoted by alpha and used to determine the threshold for statistical significance.

Test Statistic

A numerical value calculated from sample data that is used in a statistical test to evaluate the plausibility of a hypothesis about a population parameter.