If There Are Strong Economies of Scale and Scope, Then

question 31

Multiple Choice

If there are strong economies of scale and scope, then society

• A)can benefit from regulation of a natural monopoly.
• B)can gain when more firms enter the market.
• C)can gain when regulators place a price floor on the market.
• D)should promote the expansion of federally run markets.

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Definitions:

Diseconomies of Scale

occur when a company or production process becomes less efficient as it scales up, leading to increased average costs per unit.

Minimum Efficient Scale

The smallest level of production at which a firm can achieve the lowest long-term average cost, allowing it to be competitively viable.

3-D Printers

3-D printers are machines that create three-dimensional objects by adding material layer by layer, based on digital models.

Third Industrial Revolution

The period characterized by the digital revolution and the use of electronics and information technology to automate production.