When Monopolies Exist Because Economies of Scale Prevail Over the Entire

question 128

Multiple Choice

When monopolies exist because economies of scale prevail over the entire range of demand:

• A) they will charge prices too low to achieve the efficient level of output.
• B) even then, economists insist that they do not serve a useful role.
• C) economists suggest that we may want to regulate their production and pricing, but we may not want to give up their cost advantages.
• D) ATC is likely to exceed price.

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Definitions:

Mining

The process of extracting valuable minerals or other geological materials from the Earth's surface.

Economy

The system of production, consumption, and distribution of goods and services in a particular society or geographical area.

Production

The process of creating goods and services through the combination of labor, materials, energy, and technology.

Distribution

The process by which goods, services, or resources are spread or allocated across different areas or among various groups.