Which of the following is a characteristic of a natural monopoly?
a. Average cost exceeds marginal cost over large regions of output.
b. Increasing the number of firms increases each firm's average total cost.
c. One firm can supply output at a lower cost than two firms.
d. All of the above are correct.
d
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Aggregate supply is upward sloping in the
a. new classical model. b. classical model. c. monetarist model. d. real business cycle models. e. both a and c.
The presence of diminishing marginal returns to labor leads to decreasing marginal revenue product of labor and a downward-sloping demand for labor curve
a. True b. False
What is the crucial difference between inflation generated on the demand side versus inflation generated on the supply side?
a. Demand-side inflation is short-lived, while supply-side inflation lasts for a long time. b. Demand-side inflation leads to budget surpluses, while supply-side inflation contributes to budget deficits. c. Supply-side inflation is subject to control of policy makers, while demand-side inflation is beyond their reach. d. Demand-side inflation is normally accompanied by rising real GDP, while supply-side inflation may be accompanied by falling real GDP.
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.