A natural monopoly is defined as an industry in which one firm
a. can produce the entire industry output at a lower average cost than a larger number of firms could.
b. can produce the entire industry output at a lower marginal cost than a larger number of firms could.
c. is very large relative to other firms that could enter the industry.
d. can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.
A
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If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut
A) is greater than marginal cost. B) is greater than short-run average cost. C) is greater than long-run average cost. D) equals long-run average cost.
Which of the following would increase the incentive of healthcare consumers to economize and help reduce the future growth of healthcare prices in the United States?
a. an increase in the share of healthcare costs paid for either directly or from personal medical savings accounts b. subsidies that would encourage consumers to purchase low co-payment insurance plans c. a new government program that would cover the cost of prescription drugs purchased by all healthcare consumers d. a reduction in the eligibility age for the coverage of Medicare from 65 to 55 years of age
For any competitive market, the supply curve is closely related to the
a. preferences of consumers who purchase products in that market. b. income tax rates of consumers in that market. c. firms' costs of production in that market. d. interest rates on government bonds.
An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one computer?
A. 1 shirt B. ¼ shirt C. ½ shirt D. 4 shirts