Principles Of Economics, Ap Edition, 9781337292603, 1337292605, 2018
Principles Of Economics, Ap Edition, 9781337292603, 1337292605, 2018
8th Edition
ISBN: 9781337292603
Author: Mankiw
Publisher: Cengage Learning (2018)
bartleby

Concept explainers

Question
Book Icon
Chapter 15, Problem 1CQQ
To determine

The cause of the natural Monopoly.

Expert Solution & Answer
Check Mark

Answer to Problem 1CQQ

Option ‘d’ is correct.

Explanation of Solution

Option (d):

Natural monopoly exists due to higher cost of production, and an increase in the output will decrease the average total cost. Thus, option ‘d’ is correct.

Option (a):

Under Natural monopoly, firms can control either the price or quantity to increase the sales. If firms increase the price, then there will be a fall in the output leading to a decrease in the marginal revenue. Thus, option ‘a’ is incorrect.

Option (b):

When the large firms maximize its output by increasing their quantity output, then the marginal cost decreases due to the benefits of economies of scale under monopoly. Thus, option ‘b’ is incorrect.

Option (c):

Under Natural monopoly, firms can control either the price or quantity which allows the firm to increase the average revenue by increasing the price. Thus, option ‘c’ is incorrect.

Economics Concept Introduction

Concept introduction:

Monopoly: Monopoly is a market situation where a single firm exists with a large number of buyers without any available substitute.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
If you were put in charge of ensuring that the mining industry in canada becomes more sustainable over the course of the next decade (2025-2035), how would you approach this? Come up with (at least) one resolution for each of the 4 major types of conflict: social, environmental, economic, and political
How is the mining industry related to other Canadian labour industries? Choose one other industry, (I chose Forestry)and describe how it is related to the mining industry. How do the two industries work together? Do they ever conflict, or do they work well together?
What is the primary, secondary, tertiary, and quaternary levels of mining in Canada For each level, describe what types of careers are the most common, and describe what stage your industry’s main resource is in during that stage
Knowledge Booster
Background pattern image
Economics
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
Text book image
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Text book image
Micro Economics For Today
Economics
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Cengage,
Text book image
Economics For Today
Economics
ISBN:9781337613040
Author:Tucker
Publisher:Cengage Learning