1- Which statement is false? A Natural monopolies can provide cheaper service as monopolies than...

Question:

1. Which statement is false?

A. Natural monopolies can provide cheaper service as monopolies than could several competing firms.

B. The two main justifications for monopoly are economies of scale and natural monopoly.

C. Economies of scale and high capital requirements are significant barriers to entry.

D. None of these statements are false.

2. There has been an unmistakable steady trend toward bigness in business since

A. the Civil War.

B. 1911.

C. the mid-1930s.

D. the late-1990s.

3. _____ is (are) the relationship between the maximum amounts of output a firm can produce and various quantities of inputs.

A. A production function

B. The law of diminishing returns

C. Economies of scale

D. Diseconomies of scale

4. At the level of output where marginal revenue equals marginal cost, assume that the price of a competitive firm's product is between the firm's average total cost curve and its average variable cost curve. In this case the firm would

A. decrease output to reduce the costs.

B. continue to operate in the short run.

C. shut down.

D. increase output to increase profit

Natural Monopoly:

Natural monopoly is a type of an industry, in which the cost of production is very high due to such reasons as a unique access to a resource or technology or high fixed costs of operation. These high costs create high barriers to a firm's entry into such market. As a result, only a firm that is relatively large and has an advantage of an economies of scale, can efficiently operate in such markets. Every natural monopoly is a monopoly, but not every monopoly is a natural monopoly.

Answer and Explanation:

1. Which statement is false?

D. None of these statements are false.

Both statements A, B and C characterize a monopoly.

Natural monopoly is one of...

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Natural Monopoly in Economics: Definition & Examples

from Intro to Business: Help and Review

Chapter 3 / Lesson 13
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