A natural monopoly can: a. b. c. d. 5. supply the entire market at a higher cost

Question

A natural monopoly can: a. b. c. d. 5. supply the entire market at a higher cost than many competing firms. supply the entire market at a lower cost than many competing firms. always charge any price it wants since it faces no competition. use natural resources without being subjected to government regulations. If electrical service can be more efficiently provided to a market by a single supplier than by many competing suppliers, the market is considered to be a(n): a. natural monopoly b. 6. unregulated monopoly c. rent-seeking monopoly d. efficient monopoly In order to price discriminate, a monopoly firm must be able to: 0 separate customers based on different elasticities of demand. charge each customer the same price. incur a different cost for producing each unit of output. a. b. C. d. all of the above.

Explanation / Answer

5 b)

Natural monopoly occurs when the existing firms sell their output at a very low cost because the production is very high so at low cost also they can earn profit but for the new entrant since the fixed cost is very high so it's difficult to supply goods at a lower cost so they are wiped out from the market hence natural monopoly occurs.

6.a)

When an electrical services are provided to market by a single supplier it is considered to be acting like a natural monopoly it's because there is only a single supplier in the market secondly since it is providing its services at at an efficient cost hence it is an example of regulated Monopoly where the state government intervene in order to control prices.

7 d) all of the above

It is a price strategy in which different prices are collected for the same good from different consumers.

It is generally of three types .

i) first degree price discrimination it is also referred as perfectly price discrimination under this discrimination different prices are charged for every unit consumed.

ii) second degree price discrimination means charging different prices for different quantities.

iii) third degree price discrimination means charging different price from different consumers.

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