Additional Firms Often Do Not Try to Compete with a Natural

question 385

Multiple Choice

Additional firms often do not try to compete with a natural monopoly because

• A) they fear retaliation in the form of pricing wars from the natural monopolist.
• B) they are unsure of the size of the market in general.
• C) they know they cannot achieve the same low costs that the natural monopolist enjoys.
• D) the natural monopoly doesn't make a huge profit.

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Definitions:

Domestic Price

The price at which goods or services are sold within a country's own market, excluding any tariffs, duties, or international shipping costs.

Free Trade

The free trade of goods and services across nations without the application of restrictions like tariffs, duties, and quotas.

Tariff Revenue

The income that a government earns from imposing tariffs, which are taxes on imports or exports.

Domestic Price

The charge for goods or services inside a nation's boundaries, differing from prices found in the global or foreign marketplace.