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When Considering the Purchase of a Large Central System,such as Power

Question 12

Multiple Choice

When considering the purchase of a large central system,such as power generation or computer networks,firms have to decide how big a system to acquire and whether,and,if so,how to charge users for it subsequently.Which is true?  Charge  Lirely consequence \begin{array}{llcc}\text { Charge } & \text { Lirely consequence }\end{array}

a.  None  Firm acquires more capacity than needed \begin{array}{llcc}\text { None } & \text { Firm acquires more capacity than needed }\end{array}

b.  Full cost  Demand for resource equals capacity \begin{array}{llcc}\text { Full cost } & \text { Demand for resource equals capacity } \end{array}

c.  Depreciation only  Firm acquires less capacity than needed \begin{array}{llcc}\text { Depreciation only } & \text { Firm acquires less capacity than needed } \end{array}

d.  Depreciation only  Demand for resource equals capacity \begin{array}{llcc}\text { Depreciation only } & \text { Demand for resource equals capacity }\end{array}

e.  None of the above\begin{array}{llcc}\text { None of the above}&\end{array}


A) Option A
B) Option B
C) Option C
D) Option D
E) Option E

Correct Answer:

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