One Way to Take Advantage of Economies of Scale and to Avoid

question 223

Multiple Choice

One way to take advantage of economies of scale and to avoid the market power of a natural monopoly in the short run is through:

• A) price control.
• B) privatizing the monopoly.
• C) breaking up the monopoly into several smaller companies.
• D) penalty.

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Definitions:

Asset

Resources owned or controlled by a business or an individual that are expected to produce future economic benefits.

Compounded Semiannually

A method of calculating interest where the earned interest is added to the principal amount twice a year, leading to interest being earned on interest in the following periods.

Interest Rate

The fee a lender imposes on a borrower for the utilization of assets, depicted as a proportion of the principal amount.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.