If an Unregulated Electric Company Is a Monopolist and Faces

question 5

Multiple Choice

If an unregulated electric company is a monopolist and faces demand of Q = 50 - 10P,its marginal revenue function is given by

• A) 5 - Q
• B) 1 - Q
• C) 5 - Q
• D) 5 - Q

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Definitions:

Stock Price

The cost of purchasing a share of a company, as determined by supply and demand in the market.

Residual Dividend Policy

A strategy where a company pays dividends out of the residual or leftover equity only after all project capital needs are met.

Target Capital Structure

The ideal mix of debt, equity, and other financing sources a company aims to hold, used to optimize its financial performance and risk profile.

Capital Budget

The budgeting process relating to expenses for major capital, or investment, projects and purchases in a company.