Regulators usually encourage natural monopolists to engage in
A) marginal cost pricing.
B) average cost pricing.
C) marginal cost pricing, with subsidies from the government offsetting the losses.
D) inefficient pricing.
Answer: B
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Economic efficiency necessarily occurs when the firm
A) produces a given output at least cost. B) produces a given output by using the least inputs. C) earns a normal profit. D) earns an economic profit.
The difference between moral hazard and adverse selection is
a. moral hazard has to do with unobservable characteristics of individuals b. moral hazard has to do with unobservable actions of individuals c. adverse selection is when individuals change their behaviors because of a contract d. adverse selection is when you choose the wrong answer on a test
A majority of the commercial banks in the United States are not members of the Fed
a. True b. False Indicate whether the statement is true or false
The benefit to some consumer of the last unit of a good consumed is
a. represented by the height of the supply curve at that quantity b. negative if the producer is suffering economic loss c. decreases at an increasing rate in a competitive product market d. is zero e. represented by the height of the demand curve at that quantity