If a natural monopoly increases the quantity of output it produces, then:
A. it will have to increase its price.
B. its average cost will decrease.
C. its profit will increase.
D. its average cost will increase.
Answer: B
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Assume a one year U.S. bond pays 4.0% interest and a similar U.K. bond pays 5.2% interest. Which of the following changes will establish interest rate parity?
a. The British pound would be expected to appreciate by 1.2% against the U.S. dollar. b. The U.S. dollar would be expected to depreciate by 1.2% against the British pound. c. The British pound would be expected to depreciate by 1.2% against the U.S. dollar. d. The British pound would be expected to appreciate by 9.2% against the U.S. dollar. e. The U.S. dollar would be expected to appreciate by 9.2% against the British pound.
The imposition of both tariffs and nontariff barriers leads to: a. an increase in total surplus
b. increased domestic consumption. c. increases in the prices of imported goods. d. increased foreign production.
The basic formula for price elasticity of demand is
A. The percentage change in income divided by the percentage change in price. B. The percentage change in quantity demanded divided by the percentage change in price. C. The percentage change in price divided by the percentage change in quantity demanded. D. The change in quantity demanded divided by the change in price.
The demand curve for a Giffen good is
A) non-linear but downward sloping. B) vertical. C) upward sloping. D) nonexistent.