Additional Firms Often Do Not Try to Compete with a Natural

question 601

Multiple Choice

Additional firms often do not try to compete with a natural monopoly because

• A)they fear retaliation in the form of pricing wars from the natural monopolist.
• B)they are unsure of the size of the market in general.
• C)they know they cannot achieve the same low costs that the natural monopolist enjoys.
• D)the natural monopoly does not make a large profit.

---

Definitions:

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, preventing them from seeing alternative uses.

Cognitive Structure

A mental framework used to organize and interpret information, influencing how we perceive and interact with the world.

Problem Solving

The cognitive process of finding solutions to difficult or complex issues, often involving the application of logical reasoning and creativity.

Heuristic

A problem-solving strategy or mental shortcut that allows people to solve problems and make judgments quickly and efficiently.