A Local Government Prevents Any Firm from Competing with a Natural

question 93

Multiple Choice

A local government prevents any firm from competing with a natural monopoly firm. Those people who believe this is a wise policy action would likely say

• A)this is a desirable state of affairs since if competition is allowed, the natural monopoly firm will out compete all newcomers and in the end the newcomers will go out of business.
• B)the public doesn't want more than one company to produce certain goods that it buys.
• C)the first company that provides a certain good to the public should have the right to produce that good without competition from others.
• D)if competition is allowed, no firm in the industry will be able to earn profits.
• E)none of the above

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Definitions:

Diversify Investments

A strategy to spread investments across various assets to reduce risk.

Risk-Management

The process of identifying, analyzing, and responding to risk factors throughout the life of a project or business to mitigate risks.

Investment Policy Statement

A document that outlines an individual's or entity's investment objectives and strategies.

Relevant Constraints

Factors or limitations that affect the choices available to a business or individual when making decisions.