A Natural Monopoly Is a Situation That Occurs

question 5

Multiple Choice

A natural monopoly is a situation that occurs

• A) when an exotic plant kills off locals plants
• B) in industries where the cheapest way to obtain a given quantity of output is to have only one firm produce it
• C) Both answers are correct

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Definitions:

Direct Labor-Hours

The total hours of labor directly involved in manufacturing a product, used in calculating labor costs and efficiency in production.

Job-Order Costing

A system that assigns manufacturing costs to each product, providing a way to calculate the cost per item or job specifically.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a planned amount of activity.

Machine-Hours

A measure of production output or activity based on the number of hours machines are run, used in allocating machine-related costs to products.