Input proportions are usually fixed by technological conditions alone.
Answer the following statement true (T) or false (F)
False
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Mountain Water is a natural monopoly. The government decides to regulate Mountain Water by imposing a marginal cost pricing rule. The figure above shows the demand for Mountain Water. Marginal cost is $0.20 per bottle
The price of a bottle of Mountain Water is ________, and ________ thousand bottles are sold per month. A) $0.20; 400 B) $0.50; 250 C) $0.20; 500 D) $1.00; 500
________ in the domestic interest rate causes the demand for domestic assets to decrease and the domestic currency to ________, everything else held constant
A) An increase; appreciate B) An increase; depreciate C) A decrease; appreciate D) A decrease; depreciate
All else equal, a decrease in the demand for oranges will lead to a(n) ________ in equilibrium price and a(n) ________ in equilibrium quantity.
A. decrease; decrease B. increase; decrease C. decrease; increase D. increase; increase
The existence of automatic stabilizers will
A. cause the effects of shocks to aggregate demand to have a larger effect on GDP. B. reduce the size of recessionary and inflationary gaps. C. reduce the recognition lag of discretionary fiscal policy. D. eliminate recessions.