In General,which of the Following Statements Guides Policymakers with Respect

question 106

Multiple Choice

In general,which of the following statements guides policymakers with respect to a natural monopoly? The firm

• A)should be broken up into a large number of competitive firms.
• B)should be taken over by government and run as a crown corporation.
• C)is the best way to produce a given product and should be left alone.
• D)generally needs to be regulated in order to reduce allocative inefficiency.
• E)will not achieve productive efficiency without regulation.

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Definitions:

Investment

Commitment of current resources in the expectation of deriving greater resources in the future.

Effective Annual Rate

The interest rate on an investment or loan which accounts for the effect of compounding over a given period.

Semi-annually Return

The rate of return on an investment calculated by compounding interest twice a year.

Investment

The action or process of allocating resources, usually money, with the expectation of generating an income or profit.