If a Natural Monopoly Is Allowed to Set Its Price

question 514

Multiple Choice

If a natural monopoly is allowed to set its price above its average total cost, then

• A) the company makes an economic profit.
• B) the company incurs an economic loss.
• C) competitors will enter the market.
• D) the company will produce more than the efficient amount of output.

---

Definitions:

Conflict Theory

A sociological perspective that views social life as a competition, and focuses on the distribution of resources, power, and inequality as causes of conflict and social change.

Functionalism

A theoretical framework in sociology that emphasizes the interdependence of the parts of a society and their role in maintaining societal stability.

Absolute Poverty

A condition characterized by the severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information.

Relative Poverty

A condition where people are considered poor relative to the living standards of the majority in the society they live in.