If regulators were to force a natural monopoly to set the price of its product equal to its marginal cost of production (in order to encourage economically efficient use of the product), the natural monopoly will
A. understate its true costs of production.
B. shut down immediately.
C. earn an economic loss.
D. earn a normal profit.
Answer: C
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When do new firms tend to enter a competitive industry?
a. When the large firms in the industry are earning zero profit. b. When the smaller firms are leaving the industry. c. When the new entrants can earn positive profits. d. When there is an absence of fixed costs in the long run.
Refer to the figure below. If the government imposed a price ceiling of $40, what would happen in this market? 
A. There would be excess supply. B. The equilibrium quantity would fall. C. The price ceiling would have no effect. D. There would be excess demand.
If firms are producing an output greater than planned expenditures, these firms will cut back on production, which decreases GDP
Indicate whether the statement is true or false
If a monopolist sets a low price to discourage potential competitors from entering the market, it is referred as
A) price skimming. B) predatory pricing. C) penetration pricing. D) limit pricing.