A Natural Monopoly Occurs When

question 50

Multiple Choice

A natural monopoly occurs when

• A) the scale economies in production are so large that only a single firm can survive.
• B) there are firms joining together to limit output and raise prices.
• C) the government intervenes by putting barriers such as licenses or certifications.
• D) there are patents.

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Definitions:

Rent Control

Government-set price ceiling on rent.

Usury Law

Legislation regulating the maximum interest rate that can be charged on a loan, to protect consumers from excessively high rates.

Minimum Wage Law

Legislation that sets the lowest hourly wage rate that an employer can legally pay its workers.

Gas Lines

Queues of vehicles waiting to fuel up, sometimes seen during periods of fuel shortages.