When a firm has a natural monopoly, the firm's a. marginal cost curve must lie...
When a firm has a natural monopoly, the firm's
| a. |
marginal cost curve must lie above the firm’s average total cost curve. |
|
| b. |
marginal cost always exceeds its average total cost. |
|
| c. |
average total cost curve is downward sloping. |
|
| d. |
total cost curve is horizontal. |
Homework Answers
Ans: average total cost curve is downward sloping.
Explanation:
For a natural monopoly, average cost declines as the number of units produced increases over the relevant output range.Because, fixed costs are spread over more units as output increases, so average cost per unit declines as output increases.
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