When promoting average cost pricing, regulators
A. encourage firms to produce at the output level where price equals marginal cost.
B. include what they consider to be a normal rate of return on investment.
C. fail to consider a return to investors, so regulated firms often have a hard time raising investment funds.
D. inflate costs so much that price ends up as large as would prevail under unregulated monopoly.
Answer: B
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Spending money on a new car instead of a used car when you are on a fixed budget is an example of
A) a bad thing to do because you run out of money. B) living on the edge. C) the incursion of an opportunity cost. D) isolating variables.
Refer to the graph shown. Area B represents:
A. the loss of surplus by consumers resulting from a monopoly. B. consumer surplus redistributed to the monopolist. C. the loss of surplus by producers resulting from a monopoly. D. the cost to society of increasing output from Qm to Qc.
In the short run:
A. firms have the ability to enter or exit the industry. B. firms are able to alter some, but not all, of their factors of production. C. firms are unable to adjust their output choices. D. None of these are correct.
The Phillips curve shows the relationship between various rates of unemployment and
A. interest rates. B. real wage rates. C. inflation. D. the money supply. E. investment demand.