Suppose That Once a Well Is Dug,water Flows Out of It

question 115

Multiple Choice

Suppose that once a well is dug,water flows out of it continuously without any additional effort.Customers collect their water and pay a per gallon fee when they leave the site of the well.In the short run,the competitive firm in this market

• A) will not shut down because variable costs are zero.
• B) has no fixed costs.
• C) faces diminishing marginal returns.
• D) can act as a price setter.

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Definitions:

Greenmail

A strategy used to shake off a bidder’s hostile suit by offering to buy, at significantly higher cost, the portion of stock already owned by the bidder who is trying to take over the company.

Valuable Piece

An item considered to have significant monetary or sentimental worth.

Hostile Bidder

A company or individual that makes an offer to buy another company without obtaining the consent of the latter's board of directors.

Friendly Suitor

An individual or entity that proposes a non-hostile takeover or merger with another company, often presenting mutually beneficial terms.