Ameritech Has a Monopoly Over Local Telephone Service

question 101

Multiple Choice

Ameritech has a monopoly over local telephone service. If Ameritech is producing where marginal revenue is less than marginal cost, the firm

• A) could increase profits by reducing output.
• B) could increase profits by increasing output.
• C) is maximizing profits.
• D) must be earning a zero profit.

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Definitions:

Illegal Drugs

Substances whose manufacture, possession, or use is prohibited by law.

Gross Profits

The total revenue of a business minus the costs directly related to producing goods or services, before deducting any administrative expenses, taxes, or interest.

Debtor in Possession

A status in bankruptcy proceedings where a debtor maintains possession and control of their assets while undergoing reorganization under the bankruptcy code.

Bankruptcy Judge

A judicial officer with the authority to preside over bankruptcy cases.