Figure 10-15 Figure 10-15 Shows the Cost and Demand Curves

question 129

Multiple Choice

Figure 10-15
Figure 10-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-15.Erickson Power is a natural monopoly because

• A) it is a power company and all power companies are natural monopolies.
• B) average total cost is still declining when it intersects demand.
• C) of its continually declining marginal revenue curve as output rises.
• D) its marginal cost lies entirely below its long-run average cost.

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Definitions:

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, typically through owning a large percentage of its stock.

Cost Method

An accounting method used to value an investment, based on the cost to acquire it plus any additional investments or deducting any reductions.

Impairment Loss

A reduction in the book value of an asset when its market value falls below its carrying amount on the balance sheet.

Straight Line Amortization

An approach to systematically allocate the cost of an intangible asset throughout its period of usefulness.