Moving Water Around The San Diablo dam has electricity generating turbines on a chute that connects lower and upper reservoirs. During the day, water is drained from the upper reservoir to the lower to produce electricity. But at night, electricity is used to pump the water back up to the upper reservoir. Since the water is just going back and forth, how can wealth be generated?
Peak demand for electricity is during the day when but the system has excess capacity at night. This makes electricity expensive to produce during peak times during the day but cheap to produce at night. The system uses the excess capacity to move the water uphill at night, so that it can meet peak demand during the day. In the morning, the water has a higher value at the top than at the bottom.
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In the long run, a firm in monopolistic competition produces where the slope of the average total cost curve is
A) negative. B) zero. C) positive. D) equal to the marginal cost.
Both competitive firms and monopolies produce at the level where marginal cost equals marginal revenue. Then, other things remaining the same, why is price lower in a competitive market than in a monopoly?
What will be an ideal response?
Consumers don't care which supplier they buy from in a perfectly competitive market because:
A) the outputs of the firms in a perfectly competitive market are all the same. B) the consumers have no choice regarding who they buy from. C) price is always low enough that the choice of supplier doesn't matter. D) all of the above.
A monopolized market is characterized by:
a. a sole seller of a product for which there are few suitable substitutes. b. very strong barriers to entry. c. a single firm facing the market demand curve. d. all of these.