In the case of a natural monopoly, as the number of firms in the industry increases, the average cost of producing a:
A. fixed number of units stays the same.
B. fixed number of units decreases.
C. variable number of units stays the same.
D. fixed number of units increases.
Answer: D
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If the Fed wants to permanently lower interest rates, then it should raise the rate of money growth if
A) there is fast adjustment of expected inflation. B) there is slow adjustment of expected inflation. C) the liquidity effect is smaller than the expected inflation effect. D) the liquidity effect is larger than the other effects.
Refer to the above figures. A quota is placed on a foreign good. Which figure represents the situation in the domestic market for a competing domestic good?
A) Panel A B) Panel B C) Panel C D) Panel D
If a firm enlarges its factory size and realizes higher average costs of production then
a. it has experienced economies of scale. b. it has experienced diseconomies of scale. c. it has experienced constant returns to scale. d. the long-run average cost curve slopes downward. e. the long-run average cost curve shifts upward.
Which of the following statements about costs is correct?
a. When marginal cost is less than average total cost, average total cost is rising. b. The total cost curve is U-shaped. c. As the quantity of output increases, marginal cost eventually rises. d. All of the above are correct.