Which of the Following Statements About Natural Monopoly Is Correct

question 290

Multiple Choice

Which of the following statements about natural monopoly is correct?

• A) Governments regulate natural monopolies in order to ensure that costs of production are minimized.
• B) Governments regulate natural monopolies in order to ensure that the firm earns a normal profit.
• C) Governments regulate natural monopolies in order to prevent them from making profits.
• D) Governments regulate natural monopolies in order to keep their workers from earning wages that are too high.

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Definitions:

Model 220 Machine

a specific model or type of machinery, often referenced in manufacturing or industrial contexts, but without additional context, the exact nature or use cannot be determined.

Contribution Approach

A managerial accounting method that separates fixed costs from variable costs to determine the contribution margin per unit and overall contribution towards fixed costs and profits.

Differential Cost

The difference in total cost that will result from selecting one alternative over another.

Contribution Margin

The difference between sales revenue and variable costs, indicating the amount available to cover fixed costs and generate profit.