When used with a natural monopoly, an average cost pricing rule results in
A) the efficient level of output.
B) economic losses for the firm.
C) the need for government to subsidize the natural monopoly.
D) zero economic profit for the firm.
E) the firm making an economic profit.
D
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Use the following table to answer the question below. Jake's Production Possibilities ScheduleJane's Production Possibilities SchedulePounds of Green BeansPounds of CornPounds of Green BeansPounds of Corn01600801012020602080404030406020400800Jane should specialize in the production of which good?
A. corn B. green beans C. both D. neither
When Fidel Castro came to power in Cuba in 1959, Cuba's exports were predominantly sugar and tobacco and these exports made up a relatively large part of its economy. To counter this dependence on two goods, Castro's economic advisers used which of the following arguments to persuade him to impose trade restrictions?
a. comparative advantage argument b. infant industries argument c. national security argument d. antidumping argument e. diversity of industry argument
Assume the standard trade model with two countries (Alpha and Beta), two goods (food and drink), and two factors of production (land and labor). Further assume that Alpha is relatively labor-abundant and drink is relatively labor-intensive. If the countries engage in free trade, the price of food will
A. fall in Alpha and rise in Beta. B. fall in both countries. C. rise in both countries. D. rise in Alpha and fall in Beta.
Answer the following questions true (T) or false (F)
1. YFE represents the level of potential GDP in the economy. 2. Real GDP is equal to nominal GDP adjusted for productivity. 3. The marginal propensity to consume is equal to the percent change in consumption with respect to a change in income.