In a Natural Monopoly, Throughout the Range of Market Demand

question 53

Multiple Choice

In a natural monopoly, throughout the range of market demand

• A)marginal cost is above average total cost and pulls average total cost upward.
• B)average total cost is above marginal cost and pulls marginal cost upward.
• C)marginal cost is below average total cost and pulls average total cost downward.
• D)there are diseconomies of scale.

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Definitions:

Hedge Ratio

The ratio of the size of a position in a hedging instrument to the size of the position being hedged.

Strike Price

The price at which the holder of an option contract has the right to buy or sell the underlying asset.

Underlying Stock

The stock on which a derivative instrument, such as an option or future, is based.

Implied Volatility

A measure of the market's forecast of a likely movement in a security's price and is used to price options contracts.