A Flour Mill Holding Exclusive Contracts to 95% of the Wheat

question 113

Multiple Choice

A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour-producing monopoly locally because

• A) the mill has a very inelastic supply curve.
• B) the mill is a natural monopoly.
• C) the mill controls a key input.
• D) the government will declare it a monopoly.

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Negotiable

Able to be bargained or exchanged with flexibility, often used in the context of financial instruments or agreements.

Instrument

A formal legal document that records a legally enforceable act, transaction, or agreement.

Bearer Instrument

A negotiable financial instrument that denotes ownership to whoever physically holds it.