CR Evans, a Transportation Corporation, Has Just Completed the Development

C.R. Evans, a transportation corporation, has just completed the development of a new subway system in Melbourne. Currently there are plenty of seats on the subway, and it is never crowded. Its capacity well exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans common stock are experiencing incredible rates of return on their investment, due to the profitability of the corporation.
-According to the information provided, which of the following statements are most likely to be true? (i) C.R. Evans is a natural monopoly
(ii) new entrants to the market know they will earn a smaller piece of the market than C.R. Evans currently has
(iii) C.R. Evans is most likely experiencing increasing average total cost

A) (i) and (ii)
B) (ii) and (iii)
C) (i) and (iii)
D) (i) , (ii) and (iii)

Correct Answer:

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