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Monopolyeconomics-mcqs › monopoly
Published
30 May 2019
Last updated
28 May 2026

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What do we call a company whose average total cost keeps decreasing up to the output level that can fulfill the entire market demand?

Multiple choice question for Monopoly. Select an option, then review the explanation below.

Choose the correct answer

Explanation

A natural monopoly exists when a firm's average total cost continuously falls as it increases production, allowing it to serve the whole market more efficiently than multiple firms. In contrast, a perfect competitor faces constant or increasing costs, while government and regulated monopolies are defined by ownership or control rather than cost structure.

Practice related questions from the same subject.

  1. 1.Which option best describes the concept of price discrimination?
  2. 2.In contrast to a perfectly competitive market, what is a monopolist more inclined to do?
  3. 3.In a pure monopoly market, how does the price compare to the marginal revenue?
  4. 4.What action should a monopolist take when marginal revenue is greater than marginal cost?
  5. 5.What is the likely impact on production costs if a natural monopoly is divided into several smaller companies by regulators?

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