In marginal cost pricing, the natural monopoly would have to set price equal to
A) AFC.
B) AVC.
C) ATC.
D) MC.
Answer: D
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Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, which country is most likely to expand its PPF to PPF1?
A) France B) France and Germany equally C) India D) Germany E) Estonia
Which of the following prevented the Fed from reducing long-term real interest rates during the Financial Crisis of 2007-2009?
A) an increase in expected inflation B) an increase in the risk premium C) the collapse in the housing market D) the failure of the federal funds rate to respond to monetary policy
The greater the interest rate
A) the greater the present value of a sum to be received a year in the future. B) the greater the opportunity cost of another dollar of current consumption. C) the more a dollar invested today will be worth a year from now. D) the lower the discount rate.
The monopolist faces a:
A. perfectly elastic demand curve. B. downward sloping demand curve. C. perfectly inelastic demand curve. D. perfectly elastic supply curve.