Which Scenario Best Represents a Monopoly Situation

question 50

Multiple Choice

Which scenario best represents a monopoly situation

• A)Bill and Tom work separately from one another but both sell a very rare form of the same diamond.They are the only sellers of this type of diamond in town.
• B)Tim owns a fishing tackle shop in Vancouver, in which he sells the top-of-the-line fishing equipment.
• C)Bob owns the only grocery store in a small community that lies 300 kilometres from the nearest city.
• D)Robert is the only seller of a specific cola soft drink, but Erin sells one that is a close substitute.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income or profits.

After-Tax Discount Rate

The discount rate used in capital budgeting that accounts for the effects of income tax.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of a firm's shareholders' wealth maximization.

Straight-Line Depreciation

A way of assigning the cost of a tangible asset throughout its service life in even annual portions.