When a natural monopoly exists in a given industry, the per-unit costs of production will be
A. lowest when there are a large number of producers in the industry.
B. lower for the smaller firms than for larger firms.
C. minimized at the output that maximizes the industry’s profitability.
D. lowest when a single firm generates the entire output of the industry.
Answer:D
When a natural monopoly exists in a given industry, the per-unit costs of production will be
A. lowest when there are a large number of producers in the industry. B. lower for the smaller firms than for larger firms. C. minimized at the output that maximizes the industry’s profitability. D. lowest when a single firm generates the entire output of the industry.
Explanation: 26. Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?