An industry is said to be a natural monopoly when:
a. legal barriers limit entry into the market.
b. diseconomies of scale are present in the market.
c. the market demand for the product supplied by a firm is inelastic.
d. long-run average cost continues to decline as the quantity of output increases.
d
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A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule:Production Possibilities ScheduleProductABCDEFSteel012345Wheat100907555300A change from combination C to B means that
A. 2 units of steel are given up to get 75 units of wheat. B. 1 unit of steel is given up to get 15 more units of wheat. C. 1 unit of steel is given up to get 75 units of wheat. D. 2 units of steel are given up to get 15 more units of wheat.
Which of the following is not a government transfer program?
a. unemployment compensation b. Social Security c. food stamps d. Medicare e. movement of soldiers to a different military base
Which of the following is false?
a. A true or pure monopoly exists where there is only one seller of a product for which no close substitute is available. b. The situation in which one large firm can provide the output of the market at a lower cost than two or more smaller firms is called a natural monopoly. c. In monopoly, the market demand curve may be regarded as the demand curve for the firm because it is the market for that particular product. d. A monopoly firm is a price maker, and it will pick a price that is the highest point on its demand curve.
Say a consumer is choosing between red wine and white wine. The price of red wine is 20 and the price of white wine is 10. If the marginal rate of substitution is 1, and if red wine is on the horizontal axis then the consumer is purchasing:
A. More than what her income would allow B. Too much white wine C. Just the right amount of both goods D. Too much red wine