What Must a Monopoly, Such as a Public Utility, Account

question 196

Multiple Choice

What must a monopoly, such as a public utility, account for when setting its prices?

• A) A monopoly, because it has no competitors, can set prices as high as it likes.
• B) A monopoly must consider customer demand, and then set prices at the most profitable level.
• C) A monopoly must take into account what its top competitors are charging for the same product or service.
• D) A monopoly has no say in what prices it will charge because the government sets the prices for all monopolistic industries.
• E) A monopoly must look at the importance of each client, and then determine what respective rate each will be charged.

---

Definitions:

Tax Rate Structure

The system of varying tax rates that apply to different levels of income, used by governments to calculate tax liability.

Regressive

pertains to a tax system where the tax rate decreases as the taxable amount increases, meaning lower-income individuals pay a higher percentage of their income compared to higher-income individuals.

Circular 230

Regulations promulgated by the United States Treasury Department governing practice before the Internal Revenue Service by attorneys, certified public accountants, and other professionals.

Civil Penalties

Fines or sanctions imposed by a government agency as punishment for violations of legal statutes or regulations.