If a Natural Monopoly Increases the Quantity of Output It

question 43

Multiple Choice

If a natural monopoly increases the quantity of output it produces, then:

• A)its average cost will decrease.
• B)its average cost will increase.
• C)it will have to increase its price.
• D)its profit will increase.

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Definitions:

ABC

A method of identifying and assigning costs to specific activities to improve cost accuracy and managerial decision-making.

Special Materials

Materials that are uncommon, difficult to procure, or used in specialized applications.

Activity-Based Costing

An accounting method that assigns costs to products and services based on the resources they consume and the activities they require.