Refer to Figure 15-1. Which of the following statements about the firm depicted in the diagram is true?
A) The fact that this firm is a natural monopoly is shown by the long-run average total cost curve still falling when it crosses the demand curve.
B) The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises.
C) The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximizes its profits.
D) The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises.
Question 2
Because of the flaws of the concentration ratio as a measure of the extent of competition in an industry, some economists prefer another measure of competition, the Herfindahl-Hirschman Index.
Indicate whether the statement is true or false
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