In 1992,the Enron Development Corporation,a Subsidiary of the Houston-Based Energy

question 29

Multiple Choice

In 1992,the Enron Development Corporation,a subsidiary of the Houston-based energy company,signed a contract to build the largest-ever power plant in India,requiring a total investment of $2.8 billion.After Enron had spent nearly $300 million,the project was canceled by Hindu nationalist politicians in the Maharashtra state where the plant was to be built.Which of the following is true?

• A)This move by the government played well with Indian voters with visceral distrust of foreign companies since the British colonial era.
• B)This move by the government was widely criticized in India on the grounds that it would deter future foreign investment.
• C)This move by the government was widely criticized in India on the grounds that severe power shortages have been one of the bottlenecks hindering India's economic growth.
• D)None of the above

Recognize the different types of barriers to entry that sustain monopolies.

Understand the relationship between economies of scale and natural monopolies.

Analyze the significance of patents and government franchises in maintaining monopolies.

Distinguish between the profit-maximizing strategies of monopolies and competitive firms.

---

Definitions:

Stackelberg Duopoly

A strategic game in economics where one firm sets its output first, and the second firm then chooses its output, knowing the first firm's decision.

Remarkable Healing

The process of recovering from an injury or illness in an impressively rapid or efficient manner.

Stackelberg Model

A strategic game theory model that describes a market structure in which one firm (the leader) sets its output or price first, and then other firms (followers) make their decisions sequentially.

Reaction Curve

A graphical representation in economics that shows how one player’s optimal strategy choice depends on the strategy choice of another player.