Which of the Following Is the Best Example of a Natural

question 321

Multiple Choice

Which of the following is the best example of a natural monopoly?

• A) ownership of the only ferry across Puget Sound for twenty miles
• B) the United States Postal Service
• C) the cable television company in your hometown
• D) owning the only licensed taxicab in town
• E) producing a patented drug

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Definitions:

Common Equity

The portion of a company's equity that is held by common shareholders, represented by common stock.

Net Income

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

Taxes

Compulsory financial charges imposed by a government on individuals, entities, or transactions to fund public expenditures.

Basic Earning Power

An indicator of a company's profitability from operations, expressed as EBIT (Earnings Before Interest and Taxes) divided by total assets.