Scenario 15-1 Consider a Transportation Corporation Named Reading's That Has Just Completed

question 24

Multiple Choice

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? i) New entrants to the market know they will have a smaller market share than Reading's
Currently has.
Ii) Reading's is most likely experiencing decreasing average total cost.
Iii) Reading's is a natural monopoly.

• A) i) and ii) only
• B) ii) and iii) only
• C) i) and iii) only
• D) i), ii), and iii)

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Definitions:

Noncumulative Quantity Discount

A pricing strategy where discounts are based on the quantity of a single purchase order rather than the total volume purchased over time.

Sprayers

Devices or equipment used to distribute liquids in a fine spray, commonly for watering plants, applying pesticides, or painting.

Free

Gratis; something provided without charge.

Trade Discount

A reduction in the listed price of goods or services offered by a vendor to buyers in the same trade.