A Monopoly May Be Able to Earn Profits Greater Than

question 83

Multiple Choice

A monopoly may be able to earn profits greater than a competitive firm because:

• A) entry by new firms may be prevented.
• B) government policies often ensure that certain industries such as utilities earn a guaranteed rate of return on their investment.
• C) consumers are unaware of the existence of such profits and unwittingly pay the higher price.
• D) The above statement is False. In the long run a monopoly earns the same profit as a competitive firm.

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Definitions:

Work Sheet

A document used by accountants to prepare adjusting entries and to draft a company's financial statements.

Accounting Cycle

The accounting cycle is a step-by-step process of recording, classifying, and summarizing financial transactions of a business to provide an accurate picture of its financial position and performance.

Adjusting Entries

Documentation in accounting made at the termination of an accounting cycle to allot income and spending to the span in which they factually occurred.

Debit Total

The sum of all debit entries made in an account or ledger over a specific period.