If the Economies of Scale Are Large Enough, Average Cost

question 91

Multiple Choice

If the economies of scale are large enough, average cost for a natural monopoly can be:

• A) higher than the average cost under competition.
• B) lower than the average cost under competition.
• C) higher than the price of the natural monopoly.
• D) higher than the price under competition.

---

Definitions:

Consumer Protection Act

Legislation designed to safeguard the rights of consumers by ensuring fair trade, accurate information and preventing fraud.

Competitive Markets

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices or market conditions.

Informed Consumer Choice

The ability of a consumer to make a decision based on full information about product benefits, risks, and alternatives.

Contract of Purchase

A legally binding agreement between parties for the sale and purchase of goods, services, or property.