If There Is Just One Producer in an Industry Where

question 120

Multiple Choice

If there is just one producer in an industry where the average total cost curve declines throughout the output range up to where it intersects the industry demand curve:

• A) the industry will be a natural monopoly.
• B) charging a price equal to marginal cost would entail economic losses for the producer.
• C) charging a price equal to average cost would entail a welfare cost.
• D) All of the above would be true.

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Definitions:

Future Dividends

Future dividends refer to the dividends that a company plans to pay out to its shareholders in the future, based on its earnings and dividend policy.

Annual Dividend

The total amount of dividend payments a company makes to its shareholders in a year.

Required Return

The minimum profit or yield that an investor expects to receive on an investment, considering the risk involved.

Stock Purchase

The act of acquiring ownership shares in a company, representing a claim on part of its assets and earnings.