Splitting Up a the Natural Monopoly Held by a Public

question 86

Multiple Choice

Splitting up a the natural monopoly held by a public utility that produces and provides electricity would

• A) raise the total cost of production for all and force their profits to zero.
• B) raise the average cost of production and force consumers to pay more.
• C) evolve the structure of costs and demand to make competition less costly.
• D) evolve the structure of costs and demand to make competition more likely.

---

Definitions:

Net Investment

The difference between total investments and the depreciation on those investments over a period, representing the increase in value of an asset.

Marginal Tax Rate

The percentage of tax applied to your income for each tax bracket in which you qualify.

Salvage Value

The estimated resale value of an asset at the end of its useful life, considered in depreciation calculations and asset disposal decisions.

Annual Net Cash Flows

The total amount of cash that a company generates or loses over one year, after all expenses and incomes are taken into account.