The Big River Power Company is a regulated monopolist with pricing structured such that the stockholders receive a "fair" rate of return based on the firm's unit costs. Can economic thinking predict how the company executive offices are likely to be furnished? Given a choice between Hawaii and downtown Cleveland (20 miles away), where would we expect the Board of Directors to meet?
We would expect the firm to have little incentive to hold down costs. We would expect the executive offices to be lavishly furnished and the meeting to take place in Hawaii.
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If a nation's Lorenz curve lies on the 45 degree line of income equality, then
A) more of the nation's income is received by the lowest 25 percent of families than by the highest 25 percent. B) every household's income level is different. C) more of the nation's income is received by the highest 25 percent of families than by the lowest percent. D) the income received by each 25 percent of families is 25 percent of the total income.
Explain why companies that choose low-pollution technologies will find it hard to survive in a competitive industry.
What will be an ideal response?