A natural monopoly exists when:
A. several formerly competing producers merge to become the only firm in an industry.
B. unit costs are minimized by having one firm produce an industry's entire output.
C. minimum efficient scale is attained at a small level of output.
D. short-run average total cost curves are tangent to long-run average total cost curves.
Answer: B
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Use the following table with data for a private closed economy (an economy with only a private sector and no international trade) to answer the next question. All figures are in billions of dollars.Expected Rate of ReturnInvestmentConsumptionGDP10%$0$400$4008100500600620060080043007001,00024008001,20005009001,400If the real rate of interest is 2%, then the equilibrium level of real GDP will be
A. $800 billion. B. $1,200 billion. C. $1,400 billion. D. $1,000 billion.
Changes in which of the following shifts the aggregate supply curve? i. the price level ii. the money wage rate iii. potential GDP
A) i only B) ii only C) iii only D) ii and iii E) i, ii, and iii
If velocity and the money supply are __________________, then when one component of spending rises another component of spending ________________
A) constant; must fall B) constant; must rise C) rising; may not necessarily fall D) rising; must rise
The market mechanism:
A.) Works through central planning by the government. B.) Eliminates market failures created by the government. C.) Uses prices as a means of communication between consumers and producers. D.) Is very inefficient since consumers cannot communicate directly with producers.