Which of the Following Average Cost Functions Suggests the Presence

question 24

Multiple Choice

Which of the following average cost functions suggests the presence of a natural monopoly?

• A) AC = 2
• B) AC = 100/Q + 2
• C) TC = 100/Q + 2Q
• D) All of the above.

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Definitions:

Operating Activities

Business actions directly related to the production and delivery of goods and services, generating the primary revenue streams.

Equipment

In business, equipment refers to the tangible assets used in operations, such as machinery, computers, and tools, which are not intended for sale.

Depreciation Expense

The portion of the cost of a fixed asset that is considered consumed during its period of use by a business.

Prepaid Expenses

Costs incurred before receiving goods or services that are expected to be provided later.