Which of the Following Statements Is False Regarding a Natural

question 96

Multiple Choice

Which of the following statements is false regarding a natural monopoly?

• A)The minimum efficient scale is larger than the size of the market.
• B)The average total cost declines over the entire range of output.
• C)One firm can supply the entire market at a lower cost than two firms can.
• D)Fixed costs are very large compared to variable costs.
• E)Diseconomies of scale exist at a very low output level.

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Definitions:

Input Demand

Refers to the demand for production inputs (like labor and raw materials), driven by the demand for the outputs those inputs produce.

Competitive Price

A pricing strategy where the price is set based on what competitors are charging for similar products or services.

Market Price

The current price at which a good or service can be bought or sold in a marketplace.

Unionized Plumbers

Plumbers who are members of a labor union, which negotiates wage rates and working conditions on their behalf.