A Natural Monopoly Occurs Because

question 54

Multiple Choice

A natural monopoly occurs because:

• A) of the lack of competition.
• B) of ownership of vital resources.
• C) its long-run average cost of production declines throughout the entire range of output.
• D) of the patent.

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Definitions:

Fixed Costs

These are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Net Income

The total earnings of a company after subtracting all of its expenses, including taxes and operating expenses, from its total revenues.

Required Sales

Required sales refer to the sales volume or revenue needed to cover all fixed and variable costs of a business within a specific period.

CVP Income Statement

A variant of the income statement based on cost-volume-profit analysis, highlighting how costs and volume affect profit.