In cases of natural monopolies, society would be better off with many firms competing with each other.
Answer the following statement true (T) or false (F)
False
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Consider a perfectly competitive industry in a long-run equilibrium. If a single firm in that industry discovers a significant cost-saving production technology, then:
A. the firm will earn an economic profit in the long run. B. the rest of the industry will quickly adopt the new technology. C. all firms in the market will earn an economic profit in the short run. D. all the firms in the market will earn an economic profit in the long run.
It makes sense for you to channel funds regularly into a "real world" savings account so you will
What will be an ideal response?
Which of the following is a reason that banks are so heavily regulated?
A. Governments are concerned about the safety of deposits. B. The industry is a principal determinant of aggregate demand. C. Bank failures are contagious. D. All of these responses are correct.
If a natural monopoly was forced to break up into several small competitive firms, the
A. Price charged by the competitive firms should increase because they no longer have economies of scale. B. Total production for the industry should increase because of the efficiency generated by increased competition. C. Price charged by the competitive firms should decrease as the firms become more efficient. D. Cost of production should fall as the smaller firms become more efficient.