Assume That an Industry Is Currently a Monopoly

question 85

Multiple Choice

Assume that an industry is currently a monopoly.If the government breaks this monopoly up into a large number of small,perfectly competitive firms,which of the following will occur?

• A)Both price and industry output will increase.
• B)Price will fall and industry output will increase.
• C)Price will increase and industry output will decrease.
• D)Both price and industry output will decrease.

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Definitions:

Growing Annuity

A series of periodic payments that grow at a constant rate for a defined number of periods.

Cash Flow Growth Rate

The rate at which a company's cash inflow (from operations, investing, and financing) is growing over a specified period of time.

Rate of Return

The profit or loss garnered on an investment for a certain period, narrated as a percentage of the starting financial input.

University

An institution of higher education and research, which grants academic degrees in various subjects.