In a Natural Monopoly

question 13

Multiple Choice

In a natural monopoly,

• A)marginal costs follow variable costs.
• B)total costs are large compared to fixed costs.
• C)fixed costs are large compared to variable costs.
• D)variable costs are large compared to fixed costs.
• E)total costs are small compared to variable costs.

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Definitions:

Fair Value Adjustment

A modification made to the recorded book value of an asset or liability to align with its current market value.

Excess Cost

The amount by which the cost of acquisition exceeds the fair value of the net identifiable assets of a company, often allocated to goodwill or specific intangible assets.

Book Value

Book value is the value of an asset according to its balance sheet account balance, calculated by subtracting any liabilities or obligations related to the asset from its original cost.

Fair Value

The amount one would get from selling an asset or the cost to move a liability in a structured exchange among market players on the evaluation date.