Monopolies May Not Be Interested in Exploiting Economies of Scale

question 66

Multiple Choice

Monopolies may not be interested in exploiting economies of scale because:

• A) they have to sell goods at the market price.
• B) they cannot control supply in the market
• C) they do not have any competitors.
• D) they earn normal economic profits in the short run.

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Definitions:

Dividend Payable

The amount declared by a company’s board of directors to be distributed among shareholders at a set date in the future.

Residual Dividend Policy

A strategy where dividends are based on the earnings left over after all project capital needs are met.

Debt-Equity Ratio

The ratio that measures the relative proportion of shareholders' equity and debt used to finance a company's assets.

After-Tax Earnings

The amount of net income a firm has after all taxes have been paid, representing the company's profitability.