Before Summer 2008, If You Wanted a Cell Phone in Bhutan

question 420

Multiple Choice

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

• A) Price will decrease and quantity will increase.
• B) Price will increase and quantity will decrease.
• C) Both price and quantity will increase.
• D) Both price and quantity will decrease.

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Definitions:

Long-term Financing

Funding obtained for a time frame exceeding one year, used for acquiring assets, structuring mergers or acquisitions, and supporting expansive business activity.

Flotation Costs

The complete expenses a company faces while issuing new securities, such as fees for underwriting, legal matters, and registration.

Cash Flows

The total amount of money being transferred into and out of a business, particularly considered when assessing its liquidity.

Cash Budget

An estimation of the cash inflows and outflows for a business or individual for a specific period, used for managing liquidity and financial planning.