A Natural Monopoly Can Purposely Increase Its Cost of Production

question 15

Multiple Choice

A natural monopoly can purposely increase its cost of production by

• A)Using its own unregulated subsidiary to inflate its cost.
• B)Substituting cheaper inputs.
• C)Keeping marginal costs low.

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Definitions:

Finance Leases

Leasing agreements that transfer substantially all risks and rewards of ownership of the asset from the lessor to the lessee.

Contractual Agreement

A legally binding contract specifying the terms and conditions under which parties agree to perform certain actions.

Note Principal

The original amount of money borrowed or the amount still owed on a loan, separate from interest.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as a percentage of the principal.