When Economies of Scale Exist So That One Firm Can

question 79

Multiple Choice

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

• A) a natural monopoly develops.
• B) the monopoly encounters competition.
• C) economic profit is reduced to zero.
• D) the monopoly converts all of the consumer surplus into economic profit.
• E) there is always the opportunity to price discriminate.

Comprehend the role of customer and trade discounts in merchandising transactions.

Realize the financial representation of sales tax in sales transactions.

Understand the terms of sale and their impact on freight charges and ownership of goods.

Recognize the differences in financial statement accounts between service and merchandising businesses.

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