If a natural monopoly decreases the quantity of output it produces, then:
A. its profit will increase.
B. its average cost will decrease.
C. it will have to decrease its price.
D. its average cost will increase.
Answer: D
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An economy produces only two goods: paper and scissors. Dyes from paper production pollute a nearby river. Use a production possibilities curve (PPC) to illustrate your explanation of how the unfettered market would fail to provide the efficient mix of paper and scissors.
What will be an ideal response?
________ is the market structure in which there are many rival firms producing differentiated products
A) Perfect competition B) Monopolistic competition C) Monopoly D) Oligopoly
If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in
a. a 20 percent increase in the quantity demanded. b. an 18 percent increase in the quantity demanded. c. a 2 percent increase in the quantity demanded. d. a 1.8 percent increase in the quantity demanded.
The cost, c, of a college education that serves only as a signal of a high-quality worker is $20,000. The wage of a known high-quality worker, wh, is $75,000. The wage for a known low-quality worker, wl, is $50,000. For what value of the share of the work force that is of high quality, t, is a pooling equilibrium possible?
What will be an ideal response?