A Monopoly Is Most Likely to Emerge and Be Sustained

question 176

Multiple Choice

A monopoly is most likely to emerge and be sustained when

• A)output demand is relatively elastic.
• B)firms have U-shaped average-total-cost curves.
• C)fixed capital costs are small relative to total costs.
• D)economies of scale are large relative to market demand.

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Definitions:

Asset

Resources owned or controlled by a business or an individual that are expected to produce future economic benefits.

Compounded Semiannually

A method of calculating interest where the earned interest is added to the principal amount twice a year, leading to interest being earned on interest in the following periods.

Interest Rate

The fee a lender imposes on a borrower for the utilization of assets, depicted as a proportion of the principal amount.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.