The reason a profit-maximizing natural monopolist cannot set price equal to marginal cost is that it would:
A. then be forced to produce more than it could sell.
B. suffer losses since price would be less than average cost.
C. earn excessive profits, which would attract new firms into the market.
D. then be forced to produce more than the socially optimal level of output.
Answer: B
You might also like to view...
Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.
Answer the following statement true (T) or false (F)
Unemployment payments
a. rise during a recession and thus reduce the severity of the recession b. rise during a recession and thus increase the severity of the recession c. rise during inflationary episodes and thus reduce the severity of the inflation d. fall during inflationary episodes and thus increase the severity of the inflation e. fall during a recession and thus increase the severity of the recession
If interest rates rose more in the U.S. than in France, then other things the same
a. U.S. citizens would buy more French bonds and French citizens would buy more U.S. bonds. b. U.S. citizens would buy more French bonds and French citizens would buy fewer U.S. bonds. c. U.S. citizens would buy fewer French bonds and French citizens would buy more U.S. bonds. d. U.S. citizens would buy fewer French bonds and French citizens would buy fewer U.S. bonds.
The price of gold is $300 per ounce in New York and 2,550 pesos per ounce in Mexico City. If the law of one price holds for gold, the nominal exchange rate is ________ pesos per U.S. dollar.
A. 85.5 B. 8.5 C. 0.118 D. 1.18