Refer to the above figure. Regulators cannot force natural monopolies to operate in the long run at a loss. Therefore, they usually require the firms to charge a price equal to
A. average cost, which is P4.
B. marginal cost, which is P1.
C. average cost, which is P3.
D. marginal cost, which is P2.
Answer: C
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Refer to the above figure. Government policy that moved the economy from A to B would be accomplished by
A) a contractionary fiscal policy combined with an expansionary monetary policy. B) an expansionary fiscal policy combined with a contractionary monetary policy. C) a contractionary policy that would reduce the rate of inflation and would cause workers to remain unemployed longer than they were before. D) raising the minimum wage.
The diagram above depicts the demand for, and market price of, buckets of raw oysters in Orlando
a. What is the consumer surplus of the person who buys the 100th bucket of oysters? b. What is the consumer surplus of the person who buys the 200th bucket of oysters? c. What is the consumer surplus of the person who buys the 300th bucket of oysters? d. What is the total consumer surplus from all the oysters consumed in the market?
Comparing Tobin's model of the speculative demand for money with Keynesian speculative demand
A) both models imply that individuals hold only money or only bonds. B) the Keynesian model implies individuals diversify their asset holdings, while the Tobin model predicts that individuals hold only money or only bonds. C) the Tobin model implies individuals diversify their asset holdings, while the Keynesian model predicts that individuals hold only money or only bonds. D) both models imply that individuals diversify their asset holdings.
As a consumer consumes more and more of a product in a particular time period, eventually marginal utility
A) rises. B) is constant. C) declines. D) fluctuates.