If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then the firm's economic profit will be
A) $9 million.
B) $12 million.
C) $0, that is, the firm's owners make only a normal profit.
D) negative, that is, the firm incurs an economic loss.
C
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One advantage of using an inflation tax over other methods of tax collection is that:
A) inflation tax only affects individuals with a high income. B) people who evade other taxes also feel the burden of an inflation tax. C) the revenue from inflation tax is extremely high. D) the collection of inflation tax is more organized.
Because producers do not bear the external cost of pollution
A) private production exceeds the economically efficient level. B) the economically efficient level of production is achieved. C) private production is below the economically efficient level. D) the market price is too high.
If the economy is on the LM curve, but is to the left of the IS curve, aggregate output will ________ and the interest rate will ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
When decisions are made by majority rule, the individual consumption-payment link is broken
a. True b. False Indicate whether the statement is true or false