Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with
A) an average cost pricing rule.
B) a marginal cost pricing rule.
C) rate of return regulation.
D) All of the above answers are correct.
B
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"In the foreign exchange market, if the demand for the U.S. dollar increases, the U.S. dollar appreciates in value." Briefly explain whether the previous statement is correct or incorrect
What will be an ideal response?
Which of the following is an example of a focal point equilibrium?
A. Purchase of fast food because it is cheap and convenient B. Avoidance of cheap computers because low price indicates low quality C. Purchase of hip-hugger pants because pop stars wear them D. Purchase of an expensive automobile no one else owns to impress others
If average consumer incomes increase proportionately faster than the demand for a product, then the income elasticity of demand for the product is:
A. equal to 1. B. greater than 1. C. greater than zero but less than 1. D. zero.
The problems of thin markets can be addressed by:
A. guaranteed price matching. B. increasing the number of sellers in the market. C. imposing price ceilings. D. warranties and repair guarantees.