If a Natural Monopoly Decreases the Quantity of Output It

question 68

Multiple Choice

If a natural monopoly decreases the quantity of output it produces:

• A)its average costs will decrease.
• B)its average costs will increase.
• C)it will have to decrease the price that it charges.
• D)its profits will increase.

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Definitions:

Preferred Shares

A class of ownership in a corporation that has a higher claim on assets and earnings than common shares, usually with fixed dividends.

Earnings Per Share

A company's profit divided by its number of common outstanding shares, indicating the company's profitability.

Dividend Yield Ratio

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Dividend Payout Ratio

A financial ratio that measures the percentage of a company's net income that is distributed to shareholders as dividends.