For a natural monopoly, price efficiency means
A. Price is set above marginal cost.
B. Economics profits are earned.
C. Price is set equal to marginal cost.
D. Price is set equal to average total cost.
Answer: C
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Consider a large public university in which a chemistry lecture is usually attended by 300 students or so but with large amounts of available seats on any given day
Is this a pure public good? If not, why not? Is this good likely to be provided in an efficient manner if the professor is vigilant in making sure that only registered students attend? Explain.
To ensure that we get the same result for price elasticity no matter which direction we move on the demand curve, we must take the average of the
a. initial price and the initial quantity demanded and the average of the new price and the new quantity demanded b. new price and the initial quantity demanded and the average of the new quantity demanded and the initial price c. initial price and the new price and the average of the initial quantity demanded and the new quantity demanded d. initial price and the new price only e. new quantity demanded and the initial quantity demanded only
Suppose you go out with your friend for coffee and donuts at the local donut store. The first donut you eat tastes incredibly good. The second one also tastes pretty good. The third donut seems just okay. With the fourth donut you are turning somewhat green. The fifth donut makes you sick. Your friend, an economist, describes your experience as the principle of:
a. utility maximization. b. irrationality in consumer behavior. c. instant gratification. d. differing tastes and preferences. e. diminishing marginal utility.
An open market purchase of bonds by the Fed
a. will shift the money supply curve to the left. b. will drain reserves from the banking system and shift the money supply curve to the right. c. will inject reserves into the banking system and shift the money supply curve to the left. d. will shift the money supply curve to the right. e. will change the slope of the money supply curve.