A Natural Monopoly Occurs When

question 295

Multiple Choice

A natural monopoly occurs when

• A)long-run average costs decline continuously through the range of demand.
• B)a firm owns or controls some resource essential to production.
• C)long-run average costs rise continuously as output is increased.
• D)economies of scale are obtained at relatively low levels of output.

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Definitions:

Present Value Index

A financial calculation that allows the comparison of the present value of cash inflows to the present value of cash outflows.

Rate of Return

A measure of the profitability of an investment, expressed as a percentage of the original investment.

Desired Rate

A targeted rate of return or performance that a company or individual aims to achieve, often used in financial and operational planning.

Present Value Methods

Techniques used to estimate the current value of future cash flows, discounting them at a specified rate.