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If a Natural Monopoly Is Broken Up into Smaller Competing

Question 6

Multiple Choice

If a natural monopoly is broken up into smaller competing firms, the price of the product:


A) will increase because the monopolist no longer has to worry about keeping rivals from entering the industry
B) will decrease because smaller firms are price takers
C) will decrease because competition has increased
D) will increase because the smaller competing firms will face higher average costs of production than the natural monopolist will

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