If a Producer Wants a Monopoly with a Legal Barrier

question 3

Multiple Choice

If a producer wants a monopoly with a legal barrier to entry,how can this be done?
i.The producer can spend funds lobbying to attain passage of the legal barrier to entry.
ii.The producer can purchase an existing monopoly.
iii.The producer can make rent seeking expenditures.

• A) i and ii
• B) i and iii
• C) ii and iii
• D) i, ii, and iii
• E) None of the above are ways to acquire a monopoly with a legal barrier to entry.

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Definitions:

Capital Budgeting

The process of planning and managing a company's long-term investments in projects and assets, to maximize returns and shareholder value.

Incremental Cash Flows

The additional cash flow a company receives from taking on a new project, excluding any cash flows not directly attributable to the project.

Cash Expense

Expenses that require immediate outlay of cash during an accounting period.

Depreciation

The reduction in the value of an asset over time, usually due to wear and tear or obsolescence.