Suppose Monopoly Firm Has Exclusive Ownership of a Key Resource

question 9

Multiple Choice

Suppose monopoly firm has exclusive ownership of a key resource, this results in:

• A)high standards of service for customers
• B)a price that reflects the best interests of society
• C)a price that equals marginal cost of production
• D)a price that exceeds marginal cost of production

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Definitions:

Nonexcludable

A characteristic of public goods where it is not feasible to exclude individuals from using the good, leading to potential free-rider problems.

Common Resource

A resource, like air or water, that is accessible to all members of a society but subject to overuse and depletion.

Negative Externalities

Costs suffered by a third party due to an economic transaction they were not involved in.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.