Generally speaking, if a firm faces decreasing average total costs of production throughout its entire range of output, then:
A. More firms will enter the market
B. It will be unable to remain in business
C. The firm is a natural monopoly
D. The firm is able to earn only a normal profit
C. The firm is a natural monopoly
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The above figure shows the apartment rental market in Bigtown. If severe flooding resulted in the destruction of many of the city's apartment buildings, then the
A) supply curve of apartments would shift leftward and rent would rise above $750.00. B) demand curve for apartments would shift rightward and rent would rise above $750.00. C) equilibrium quantity of apartments rented would increase beyond 3,000. D) equilibrium market price of apartments rented would fall below $750.00.
An income tax in which the average tax rate increases with income is called a
A) regressive income tax. B) proportional income tax. C) flat-rate income tax. D) progressive income tax.
For a mortgage lender that makes mortgage loans to borrowers, which one of the following would be an example of moral hazard?
a. After the loan has been made, individuals become careless with their finances b. Individuals most likely to default are the ones most likely to apply for the loan c. Lenders performing a credit check on all potential borrowers d. None of the above
In the circular-flow diagram, which of the following is not a factor of production?
a. labor b. land c. capital d. money