In 2003, government spending as a percentage of GDP was approximately
a. 75 percent
b. 50 percent
c. 33 percent
d. 20 percent
e. 10 percent
C
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Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in
A) least cost pricing and average cost pricing. B) price discrimination and two-part tariff pricing. C) zero profit pricing. D) profit-maximizing pricing. E) None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss.
Refer to Scenario 17.4. If the flood control system were not in place, the insurer would not be willing to insure against the flood for any premium less than
A) $5,000. B) $10,000. C) $100,000. D) $200,000. E) $1,000,000.
The perfect competitor has a perfectly elastic demand curve
A. only in the short run. B. only in the long run. C. in both the short run and the long run. D. in neither the short run nor the long run.
The amount by which actual output falls short of potential output is called _____
Fill in the blank(s) with the appropriate word(s).