If the Government Breaks Up a Constant-Cost, Nondiscriminating Monopoly into a Perfectly

question 236

Multiple Choice

If the government breaks up a constant-cost, nondiscriminating monopoly into a perfectly competitive industry, what would we expect with regard to output and price?

• A)Output and price will decrease.
• B)Output will increase and price will decrease.
• C)Output and price will increase.
• D)Output will decrease and price will increase.
• E)No change.

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Definitions:

Net Operating Income

The total revenue from operations minus the operating expenses, exclusive of taxes and interest, in a different phrasing.

Variable Manufacturing Overhead

Costs of manufacturing that vary directly with the level of production, such as utilities for the manufacturing plant.

Break-even Sales

The amount of revenue needed to cover all fixed and variable costs, resulting in neither profit nor loss.

Southern Division

A geographical or organizational subsection of a company that operates in the southern region.