In case of natural monopoly (i) \(C(q_1 + q_2)\) \(< C(q_1) + C(q_2)\) (ii) \(\frac{C(q)}{q}\) \(>…
Natural monopoly is associated with subadditive costs: producing the combined output in one firm costs less than splitting it between firms. Declining average cost gives the…
Choose your answer
In case of natural monopoly
(i)
(ii)
(iii)
(iv)
Choose the correct option:
Answer and explanation
Correct answer A
Natural monopoly is associated with subadditive costs: producing the combined output in one firm costs less than splitting it between firms. Declining average cost gives the relationship in statement (ii), while statements (iii) and (iv) reverse these cost relationships.
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West Bengal SET (WB SET)