Firm a Is a Monopoly Because of Network Effects,whereas Firm

question 185

Multiple Choice

Firm A is a monopoly because of network effects,whereas Firm B is a natural monopoly.Which of the following statements is likely to be true in this context?

• A) The average total costs of both firms decrease as they increase their output.
• B) The value of the product that both firms produce increases with an increase in the number of buyers.
• C) Firm A enjoys a monopoly status because its marginal cost decreases with increase in output, whereas Firm B enjoys a monopoly status because the value of its product increases as more consumers buy it.
• D) Firm B enjoys a monopoly status because its average total cost decreases with increase in output, whereas Firm A enjoys a monopoly status because the value of its product increases as more consumers buy it.

---

Definitions:

Active

Refers to something currently in operation or in use.

Nonintrusive

A term describing techniques or methods that do not require physical alteration or penetration of a system or object to assess or interact with it.

Monitor

To observe and check the progress or quality of something over a period, often through the use of instruments or sensors.

Pending Code

A diagnostic trouble code that is stored in memory, but not displayed, the first time the ECM detects a potential fault. A second trip is required to confirm the fault and display a hard code.