Scenario 15-1 Consider a Transportation Corporation Named Reading's That Has Just Completed

question 624

Multiple Choice

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? (i)
New entrants to the market know they will have a smaller market share than Reading's currently has.
(ii)
Reading's is most likely experiencing decreasing average total cost.
(iii)
Reading's is a natural monopoly.

• A)(i) and (ii) only
• B)(ii) and (iii) only
• C)(i) and (iii) only
• D)(i), (ii), and (iii)

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Definitions:

Special Endorsement

An endorsement on a negotiable instrument, such as a check, specifying the person to whom or the entity to which the instrument is to be paid.

Promissory Note

A promise in writing, signed by the maker, to pay a sum certain in money to the person named therein, or bearer, at some fixed or determinable future time, or on demand.

Maker

In finance, the maker is the party that creates or issues a promissory note, thereby agreeing to pay a certain amount of money to a payee at a future date.

Bearer

An individual in possession of an instrument, such as a check or bond, that is not made out to a specific payee.