A regulated natural monopoly is allowed to set a price which will enable it to earn an above-normal profit

If a financial institution extends a 25 year loan at a 6 percent interest rate, and then the inflation rate increases suddenly and unexpectedly to 6 percent per year, the institution receives on its loan a real return of

A) minus 12 percent. B) zero percent. C) 6 percent. D) 12 percent. E) 36 percent.

Pepsi is considering an expensive advertising campaign to steal market share from Coca-Cola. Why might both companies have a dominant strategy to advertise, even if advertising attracts few new customers to the cola drink industry?