Which of the following statements about natural monopoly is correct?
A) Governments regulate natural monopolies in order to ensure that costs of production are minimized.
B) Governments regulate natural monopolies in order to ensure that the firm earns a normal profit.
C) Governments regulate natural monopolies in order to prevent them from making profits.
D) Governments regulate natural monopolies in order to keep their workers from earning wages that are too high.
Answer: B
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Suppose there was a banking crisis. The money supply would shrink by the greatest amount if the public ________ their currency—deposit ratio and the banks ________ their reserve—deposit ratio
A) decreased; decreased B) decreased; increased C) increased; decreased D) increased; increased
Regardless of market structure, all firms
A) consider the actions of rivals. B) maximize profit by setting marginal revenue equal to marginal cost. C) produce a differentiated product. D) have the ability to set price.
If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by
a. buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras. b. buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala. c. buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala. d. buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras.
A headline reads: "Economy Still in Recession." The type of unemployment most closely associated with this economic condition would be:
A. structural. B. frictional. C. search. D. cyclical.