Identify the best reason for regulating a natural monopoly
a. A natural monopoly can serve the entire market at a lower average cost than if two or more smaller firms split the market and compete against each other. Thus consumers can benefit from the existence of monopoly, and regulators must protect consumers by regulating the monopoly's price.
b. A natural monopoly is a high-cost producer that creates significant employment opportunities in an economy. Thus regulators must protect them from competition.
c. A natural monopoly is a large firm whose production depends largely on the natural resource endowment in a country. Regulators must control the prices of their products to help them maintain the high cost of sustainable resource management.
d. A natural monopoly is a large firm that creates negative production externalities in an economy. Thus regulators impose lumpsum taxes on their produce and redistribute the proceeds to correct these negative externalities.
a
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When drawing a production possibilities frontier, which of the following is held constant?
A) the amount of money in the economy B) the available factors of production and the state of technology C) the prices of goods and services D) the quantity of the goods and services that are produced E) None of the above because nothing is held constant when drawing the production possibilities frontier.
If the cross-price elasticity of demand is positive, then the
a. two goods are complements b. two goods are substitutes c. two goods have no relationship to each other d. price is below the equilibrium e. price is above the equilibrium
Automatic stabilizers "lean against the prevailing wind" of the business cycle because:
A. wages are controlled by the minimum wage law. B. federal expenditures and tax revenues change as the level of real GDP changes. C. the spending and tax multipliers are constant. D. they include the power of special interests.
The large increase in the elasticity of supply in crude oil during 2014-2015 was attributable to
A. directional drilling. B. hyperaccurate seismologic mapping. C. hydraulic fracturing. D. all of these.