The government should set the price for natural monopolies at their:
A. average total cost.
B. marginal cost.
C. average variable cost.
D. fixed cost.
Ans: A. average total cost.
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When a game has more than one Nash equilibrium
a. players will choose the strategies which maximize total welfare. b. players are likely to choose the strategies which minimize total welfare. c. it is difficult to predict which of the equilibria will occur or whether it is stable. d. it is difficult to predict which of the equilibria will occur but once one is reached it is likely to remain stable.
In the cartel model
a. firms believe that price increases result in a very elastic demand, while price decreases result in an inelastic demand for their products. b. each firm acts as a price taker. c. one dominant firm takes the reactions of all other firms into account in its output and pricing decisions. d. firms coordinate their decisions to act as a multiplant monopoly.
During the twentieth century, the real income of the average American grew by a factor of more than seven.
Answer the following statement true (T) or false (F)
In the early 2000s, some argued that the Indian government impeded foreign investment with tariffs, investment caps, and tons of red tape. In terms of promoting or retarding economic growth, such policies:
A. increase growth because they keep people producing for the local market. B. decrease growth because they slow the growth of capital. C. increase growth because they stop exploitation by foreigners. D. decrease growth because they cause inflation.