A natural monopoly
A) requires government licensing initially.
B) is derived from deposits of natural resources.
C) usually arises when there are large economies of scale.
D) involves multiple firms selling differentiated products.
Answer: C
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In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. Who has a comparative advantage in producing caps? If Sue and Tessa specialize and trade, who will gain?
What will be an ideal response?
In a Stackelberg game, a monopolist could deter entry from a potential rival by
A) telling the potential rival not to enter. B) strategically moving first. C) moving to a Bertrand model. D) None of the above.
Which of the following is not an example of an institution (rules of the game)?
a. formal rules of behavior b. government takeover of private corporations c. a constitution d. informal constraints on behavior e. traditions
A theory or model is a simplification of reality, in much the same way that a road map shows only those features needed to get from one point to another.
a. true b. false