An Industry Is a Natural Monopoly When

question 571

Multiple Choice

An industry is a natural monopoly when
(i) the government assists the firm in maintaining the monopoly.
(ii) a single firm owns a key resource.
(iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

• A)(ii) only
• B)(iii) only
• C)(i) and (ii) only
• D)(ii) and (iii) only

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Definitions:

Total Revenue

The total income received by a firm from selling its goods or services, calculated as the unit price multiplied by the quantity sold.

Law of Demand

A principle that states there is an inverse relationship between the price of a good and the quantity of it buyers are willing to purchase. As the price of a good increases, consumers will wish to purchase less of it. As the price decreases, consumers will wish to purchase more of it.

Tuna Sandwiches

A type of sandwich made primarily with tuna and other ingredients such as mayonnaise and celery.

Demand for Margarine

The consumer desire or market requirement for margarine, reflecting how much of the product people are willing and able to purchase at a given price.