A Natural Monopoly Arises When

question 29

Multiple Choice

A natural monopoly arises when

• A) one firm controls the supply of a unique resource.
• B) a firm has many small firms that it can control.
• C) there are firms which act together as a monopoly.
• D) the long-run average cost curve slopes downward as it crosses the demand curve.
• E) one firm naturally convinces the government to limit competition in the market.

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Definitions:

Short-Term Financing

Short-term financing involves borrowing funds to meet immediate business needs for a period typically less than a year.

Cyclical

Refers to businesses or stocks that are heavily affected by economic changes, often experiencing higher growth in positive economic conditions and contractions during downturns.

Non-Cyclical

Refers to industries or stocks that are relatively unaffected by economic downturns or declines because they provide essential goods or services that continue to be in demand.

Cash Cycle

The amount of time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.