Asked by Salli Braswell on Jul 15, 2024
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A natural monopoly exists when:
A) unit costs are minimized by having one firm produce an industry's entire output.
B) several formerly competing producers merge to become the only firm in an industry.
C) short-run average total cost curves are tangent to long-run average total cost curves.
D) minimum efficient scale is attained at a small level of output.
Natural Monopoly
A market condition where due to high fixed costs or unique resources, a single company can supply a product or service at a lower cost than any potential competitor, thus dominating the market.
Unit Costs
The price a business incurs for the production, storage, and distribution of a single unit of a certain product or service.
Minimum Efficient Scale
The smallest amount of production a company can achieve while still taking full advantage of economies of scale regarding costs per unit of output.
- Understand the concept of natural monopolies and their economic implications.
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Learning Objectives
- Understand the concept of natural monopolies and their economic implications.
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