A natural monopoly
A. usually arises when there are large economies of scale.
B. involves multiple firms selling differentiated products.
C. is derived from deposits of natural resources.
D. requires government licensing initially.
Answer: A
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Refer to Table 3-6. The table contains information about the sorghum market. Use the table to answer the following questions
a. What are the equilibrium price and quantity of sorghum? b. Suppose the prevailing price is $6 per bushel. Is there a shortage or a surplus in the market? c. What is the quantity of the shortage or surplus? d. How many bushels will be sold if the market price is $6 per bushel? e. If the market price is $6 per bushel, what must happen to restore equilibrium in the market? f. At what price will suppliers be able to sell 36,000 bushels of sorghum? g. Suppose the market price is $14 per bushel. Is there a shortage or a surplus in the market? h. What is the quantity of the shortage or surplus? i. How many bushels will be sold if the market price is $14 per bushel? j. If the market price is $14 per bushel, what must happen to restore equilibrium in the market?
The fixed-cost fallacy occurs when
a. A firm considers irrelevant costs b. A firm ignores relevant costs c. A firm considers overhead or depreciation costs to make short-run decisions d. Both a and c
If the price elasticity of demand for a good equals one, then the demand for that good is:
A. perfectly elastic. B. unit elastic. C. inelastic. D. elastic.
Standard utility maximizing theory does not take into account that humans have ______
a. budget constraints b. bounded rationality c. marginal utility d. product preferences