If a natural monopolist were forced to set price equal to average cost, it would:
A. suffer losses.
B. earn a normal profit.
C. be forced to produce more than the socially optimal level of output.
D. earn excessive profit.
Answer: B
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In his second term, President George W. Bush revived his earlier proposal to
A. eliminate entirely the Social Security taxes paid by employers. B. place some Social Security taxes of young workers in private accounts under their control. C. place all Social Security taxes of young workers in private accounts under their control. D. reduce by one-half the Social Security tax rates on employers.
When the price level increases, total planned real expenditures on goods and services falls. All of the following are responsible EXCEPT
A) the interest rate effect. B) the real-balance effect. C) the substitution effect. D) the open economy effect.
Which of the following is the best example of a short-run adjustment?
A) Toyota builds a new assembly plant in Texas. B) Smith University completed negotiations to acquire a large piece of land to build its new library. C) Your local Wal-Mart hires two more associates. D) A local bakery purchases another commercial oven as part of its capacity expansion.
The federal budget was in deficit from 1931 to 1939, except in the year 1937
Given this fact, how do you explain E. Cary Brown's statement, "Fiscal policy, then, seems to have been an unsuccessful recovery device in the 'thirties-not because it did not work, but because it was not tried."