When Economies of Scale Are Important, Imposing Competition by Splitting

question 175

Multiple Choice

When economies of scale are important, imposing competition by splitting a monopolistic firm into many rival units will

• A) lead to an increase in the per-unit cost of production in the industry.
• B) not affect per-unit costs but will affect demand conditions.
• C) generally increase the social efficiency of production.
• D) cause the industry demand curve to increase (shift to the right).

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Definitions:

Accrued Interest

The interest that has been earned but not yet received or paid in cash, applicable in both investment and borrowing contexts.

Balance Sheet

A report detailing a company's assets, liabilities, and equity of shareholders at a certain moment.

Accounts Payable Turnover Ratio

A liquidity metric that measures how quickly a company pays off its suppliers.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.