If an Inefficient Public Monopoly Cannot Provide a Service at a Price

question 2

Multiple Choice

If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay it:

• A)can remain in operation by covering its losses with revenue from taxes.
• B)must shut down and leave the industry in the long run.
• C)should expand operations until demand is satisfied.
• D)will seek out more efficiencies.

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Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Operating Activities

The day-to-day actions that involve the production, sales, and delivery of a company's product or service, as reflected in its income statement.

Statement Of Cash Flows

A financial document that provides a summary of a company's cash inflows and outflows over a specific period.

Indirect Method

A technique used in cash flow statements where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.