A group of friends recently started manufacturing specialty T-shirts. The business has grown rapidly, with monthly production up from 50 to 250 in the first 6 months. During this same period, average production cost has been cut in half
The firm's long-run average cost curve over this range of output A) is downward sloping.
B) is upward sloping.
C) is horizontal.
D) may be any of the above.
D
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Cost-of-service regulation allows regulated companies to charge prices that
A) reflect the cost of regulating the industry, plus the marginal cost of the product. B) allow monopoly profits to the producer. C) reflect the actual average cost of providing the services to the customer. D) are determined by competition in other geographic markets.
A monopolistically competitive industry has
A. a differentiated product and significant barriers to exit and entry. B. a differentiated product and the ability to make a long-run profit. C. a differentiated product and a small influence over price. D. identical products and ease of exit and entry.
When the Fed buys U.S. government securities, the money supply
A. increases because there is an increase in transaction deposits at the bank of the bond dealer but there is no decrease in transaction deposits at any other bank. B. remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a reduction in transaction deposits at the Fed. C. decreases because there is an increase in the reserves of the bond dealer's bank. D. remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a fall in transaction deposits at another bank.
For most commonly used social welfare functions, an efficient allocation is
A) always preferred over any inefficient allocation. B) not possible. C) usually preferred. D) never preferred.