In Order for a Natural Monopoly to Develop, It

question 139

Multiple Choice

In order for a natural monopoly to develop, it

• A)is important that the firm be very large.
• B)is important that the firm prices its product below cost.
• C)is not the absolute size of the firm but its size relative to the total market demand that is important.
• D)must be in the presence of government intervention.

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Definitions:

Long-Term Growth

A process where the productive capacity of an economy increases over a long period, typically accompanied by higher living standards.

Economic Fluctuations

The ups and downs in economic activity, characterized by periods of expansion and contraction in GDP and other economic indicators.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of one good that can be produced for every possible level of production of another good, assuming a fixed amount of resources.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision or choosing between options.