A Natural Monopoly Exists Whenever a Single Firm

question 125

Multiple Choice

A natural monopoly exists whenever a single firm:

• A)is owned and operated by the government.
• B)is investor owned but has been granted the exclusive right by the government to operate in a market.
• C)has economies of scale over the entire range of production that is relevant to its market.
• D)has gained control over a strategic input of an important production process.

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Definitions:

Standard Costing System

A cost accounting method that assigns expected costs to each unit of product to help managers monitor performance.

Direct Labour Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service.

Standard Overhead Rate

The rate at which indirect costs are allocated to products or services based on a pre-determined basis, such as labor hours or machine hours.

Direct Labour Hour

A measure of the amount of time workers spend on a specific task, directly involved in the production of goods or services.