An unregulated natural monopolist would produce to the point at which
A. P = MR.
B. MR = ATC.
C. P = ATC.
D. MR = MC.
Answer: D
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If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry
a. There will be new industries blooming over time b. There will be an interest in the industry over time c. There will be an exit from the industry over time d. All of the above e. None of the above
Why do prices have to be based on supply and demand, rather than cost?
A) Costs, unlike supply and demand, are based on subjective factors. B) People cannot be compelled to base prices on costs C) People should be free to set whatever prices they prefer. D) Supply and demand determine costs. E) Because basing prices on costs is less efficient than basing prices on supply and demand.
In the figure above, at point A the consumer is willing to give up ________ pounds of pickles to get one additional pound of olives
A) 8 B) 6 C) 1 1/3 D) 2
If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until
A) all consumers will be able to afford the product. B) the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. C) quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price. D) quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.