Think of the firms and industries that are familiar to you—how many firms in the industry, what their cost structures may look like—and decide which among them is least likely to be a natural monopoly
a. a professional football franchise in Toledo, Ohio
b. a pharmaceutical firm that produces a life-saving drug after 10 years of research investment
c. a public utilities firm, such as an electric power company
d. a high school in a small rural Kentucky town
e. an alternative rock band
E
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Use the following table to answer questions a-c
Output (Q): 0 1 2 3 4 5 6 Total Cost (TC): $36 $45 $52 $61 $74 $91 $110 a. What is the average fixed cost of producing 4 units of output? b. What is the marginal cost of producing the third unit of output? c. At what level of output does the firm encounter diminishing marginal returns? How do you know?
Assume that one firm in a perfectly competitive market adopts a technological innovation that enables it to produce at a lower cost per unit than competing firms in the short run. Which of the following statements is correct?
a. The innovating firm will earn above-normal profit in the long run. b. All the competing firms will be forced to exit the market in the long run. c. This is an example of a decreasing cost industry. d. Competing firms will need to adopt the new technology in the long run in order to survive. e. Only new firms entering the industry with new-technology plants will be able to compete with the innovating firm.
If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that
What will be an ideal response?
In the long run, what effect does a government's deficit spending have on equilibrium real Gross Domestic Product (GDP)?
A. Higher government deficits will not raise equilibrium Gross Domestic Product (GDP) above the full-employment level. B. Higher government deficits will raise equilibrium Gross Domestic Product (GDP) above the full-employment level and also have an inflationary effect. C. Deficit spending will decrease the nation's equilibrium real Gross Domestic Product (GDP). D. Government deficit spending will increase equilibrium real Gross Domestic Product (GDP).