When a Natural Monopoly Exists, It Is

question 126

Multiple Choice

When a natural monopoly exists, it is

• A)always cost effective for government-owned firms to produce the product.
• B)never cost effective for one firm to produce the product.
• C)always cost effective for two or more private firms to produce the product.
• D)never cost effective for two or more private firms to produce the product.

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Definitions:

Poison Pill

A defensive strategy employed by a company's management to prevent or deter hostile takeovers by making the company less attractive to the potential acquirer.

Flip-over Provision

A defensive strategy in a company's charter to deter hostile takeovers, allowing shareholders to buy shares at a discount if a single buyer acquires a significant portion of the company.

Share Rights Plan

A defense strategy used by corporations to deter hostile takeovers, allowing existing shareholders the right to purchase additional shares at a discount.

Diversification

The strategy of spreading investments among various financial instruments or sectors to reduce risk.