Regulated monopolies that are allowed a specific profit rate have an incentive to hold down costs.
Answer the following statement true (T) or false (F)
False
If a firm is permitted a specific profit rate (or rate of return), it has no incentive to limit costs. On the contrary, higher costs imply higher profits. If permitted to charge 10 percent over unit costs, a monopolist may be better off with average costs of $6 rather than only $5.
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Suppose the production function for a certain device is q = L + K. If neutral technical change has occurred, which of the following could be the new production function?
A) q = L + 5K B) q = 5 ? (L + K) C) q = 5L + K D) All of the above are possible.
Colonists owned the vast majority of the tonnage shipped between
a. New England and the West Indies. b. England and the West Indies. c. The Middle colonies and England. d. The South and the West Indies.
How are banks and venture capital firms different?
A. Banks are financial intermediaries. B. Banks receive funds from the suppliers of capital. C. Venture capital firms expect quite a few of their investments to fail. D. Venture capital firms provide funds to businesses.
As the economy moves to the right of the long-run Phillips curve, inflationary:
A. pressures subside. B. expectations rise. C. pressures remain constant. D. pressures build.