Natural Monopolies

question 163

Multiple Choice

Natural monopolies:

• A) produce the optimal quantity of output, unlike other monopolies.
• B) exist when one firm can produce the market output at a lower cost than two or more firms.
• C) generally experience large diseconomies of scale, leading to production inefficiencies and work stoppages.
• D) face market demand curves that are perfectly elastic.

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Definitions:

Illegal Dividend

A dividend declared and distributed by a company when it is not legally permissible to do so, either due to financial insolvency or violation of statutory requirements.

Shareholder

An individual or entity that owns shares in a corporation, thereby holding a portion of the company's stock and potentially benefiting from its profits in the form of dividends.

Preemptive Right

A shareholder’s option to purchase new issuances of shares in proportion to the shareholder’s current ownership of the corporation.

Model Business Corporation Act

A set of model laws prepared to assist states in drafting legislation to regulate the formation and operation of corporations.