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.

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Definitions:

Private Speech

Self-directed speech that individuals, especially children, use to guide their own actions and thoughts, playing a key role in cognitive development according to Vygotsky.

Imaginary Audience

A psychological concept where an individual believes that his or her behavior is constantly being watched and judged by others, often seen in adolescence.

Adolescent Egocentrism

A characteristic of adolescence involving difficulty distinguishing between one's own perspective and someone else's perspective.

Naive Idealism

A worldview characterized by the belief in a perfect or ideal scenario, often without considering practical limitations or the complexity of real situations.