If an Inefficient Public Monopoly Cannot Provide a Service at a Price

question 2

Multiple Choice

If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay it:

• A)can remain in operation by covering its losses with revenue from taxes.
• B)must shut down and leave the industry in the long run.
• C)should expand operations until demand is satisfied.
• D)will seek out more efficiencies.

---

Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt with its earnings before interest and taxes.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales or revenue; calculated by dividing sales or revenue by total assets.

Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its quick assets.