Under an average-cost pricing policy:
A. a regulatory agency picks a price equal to a natural monopoly's marginal cost.
B. a regulatory agency picks a price equal to a natural monopoly's average fixed cost.
C. a regulatory agency picks a price at which a natural monopoly's demand curve intersects its average cost curve.
D. firms earn economic profits greater than zero.
Answer: C
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Refer to the table below. Suppose the columns in this table reflect demand and supply. At a price of $30:Price PerUnitColumn A UnitsPer YearColumn B UnitsPer Year$2010040$309550$408060$506570$605080
A. there will be an excess supply of 45 units. B. there will be an excess demand of 45 units. C. the market will be in equilibrium. D. there will be an excess demand of 95 units.
Under laissez-faire, output selection is determined by
A. consumer preferences. B. production costs. C. firms’ desires to make profits. D. All of the responses are correct.
Price elasticity of demand is defined as
A) the change in price divided by the change in quantity demanded. B) the change in quantity demanded divided by the change in price. C) the percentage change in price divided by the percentage change in quantity demanded. D) the percentage change in quantity demanded divided by the percentage change in price. E) the quantity demanded divided by the price.
Which of the following statements is FALSE regarding the definition of poverty?
A) A threshold income level is used to define poverty. B) Adjustments to the poverty level are made on the basis of changes in the Consumer Price Index. C) Real incomes in the United States have been growing at a compounded annual rate of almost 2 percent per capita. D) Poverty cannot be defined in relative terms.