AWhat Is the Defining Characteristic of a Natural Monopoly

question 2

Essay

a.What is the defining characteristic of a natural monopoly?
b.Should the government break up a natural monopoly into two or more firms to make the industry more competitive?
c.Suppose the government wants to ensure that some of the benefits of declining average total cost are passed on to consumers.To achieve this goal, it requires that the natural monopoly set its price equal to marginal cost.Is this a feasible goal? Explain.
d.What is an alternative to marginal cost pricing that ensures that consumers reap some of the benefits of declining average total cost?

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Definitions:

Trophic Level

A level in an ecosystem's food web characterized by organisms that share the same step in energy flow, such as primary producers or primary consumers.

Grazing Food Chain

Food chain in which energy is transferred from producers to grazers (herbivores).

Detrital Food Chain

Food chain in which energy is transferred directly from producers to detritivores.

Atmosphere

The layer of gases surrounding a planet or moon, held in place by gravity, essential for life on Earth.