Due to the impact of increasing returns to scale, smaller firms can produce at a lower average total cost than larger firms

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost

Indicate whether the statement is true or false

A moral hazard arises when

A. high-risk individuals are unable to find insurance. B. insurance leads the insured to be less careful. C. risk-averse individuals purchase insurance. D. insurers are unable to fully pay legitimate claims.