Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo). PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
(i) New entrants to the market know they will have a smaller market share than PPCo currently has.
(ii) PPCo is a natural monopoly.
(iii) PPCo would experience higher profits if it were government-run.
a. (i) and (ii) only
b. (ii) and (iii) only
c. (i) and (iii) only
d. (i), (ii), and (iii)
Answer: a. (i) and (ii) only
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Answer the next question based on the following data. All figures are in billions of dollars.Gross investment$18National income100Net exports2Personal income85Personal consumption expenditures70Saving5Government purchases20Net domestic product105Statistical discrepancy0The gross domestic product for the above economy is ________.
A. $107 B. $95 C. $110 D. $100
Explain the principle "Make the poorest as well off as possible." Who proposed it?
What will be an ideal response?
Equity holders are a corporation's ________. That means the corporation must pay all of its debt holders before it pays its equity holders
A) debtors B) brokers C) residual claimants D) underwriters
Who benefits from rising inflation?
A) those who already have fixed-rate loans B) those considering taking out a loan C) lenders that already made loans D) lenders considering whether to make new loans