If Regulators Break Up a Natural Monopoly into Many Smaller

question 15

Multiple Choice

If regulators break up a natural monopoly into many smaller firms, the cost of production

• A) will remain the same.
• B) will fall.
• C) will rise.
• D) could either rise or fall depending on the elasticity of the monopolist's supply curve.

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Definitions:

Prospectus

A formal document that companies and mutual funds use to describe the investment offering to potential investors, providing details such as objectives, risks, and financials.

SEC

The U.S. Securities and Exchange Commission, a federal agency tasked with protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation.

Initial Public Offerings

Initial public offerings (IPOs) refer to the process by which a private company becomes publicly traded by offering its shares to the public for the first time.

Secondary Market

A market where investors buy and sell securities they already own, as opposed to the primary market where securities are first issued.