If the government regulates a natural monopoly by forcing the firm to set price equal to marginal cost,
A) the firm will earn a negative economic profit.
B) the firm will earn zero economic profit.
C) the firm will earn a fair economic profit.
D) the firm will earn a positive and large economic profit.
A
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What is a budget constraint?
What will be an ideal response?
The law of demand is illustrated by a demand curve that is
a. horizontal b. vertical c. upward sloping d. constant e. downward sloping
Suppose there is a reduction in consumer income and an increase in the price of jet fuel, an important resource used to produce air travel. If air travel is a normal good, how will these changes influence the price and quantity of air travel? The price of air travel will (be) ____ and quantity purchased will (be) ____
a. decrease; indeterminate b. increase; indeterminate c. decrease; decrease d. indeterminate; decrease
If the U.S. has a capital account surplus, it means that
A. foreigners purchase more of U.S. assets than U.S. residents purchase foreign assets. B. U.S. exports of capital goods exceed its imports of capital goods. C. U.S. residents purchase more foreign assets than foreigners purchase U.S. assets. D. the quantity supplied of U.S. financial assets exceed the quantity demanded.