A firm that has taken advantage of economies of scale and expanded to become the only producer in the market is
A) a cartel.
B) a natural monopoly.
C) a monopolistic competitor.
D) an oligopolist.
Answer: B
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Demand functions are "homogeneous of degree zero in all prices and income.". This means
a. a proportional increase in all prices and income will leave quantities demanded unchanged. b. a doubling of all prices will not alter consumption decisions. c. prices directly enter individuals' utility functions. d. an increase in income will cause all quantities demanded to increase proportionately.
When everyone correctly anticipates that the Fed will buy government securities, then they know that prices will increase. Which of the following adjustments is not likely to occur?
A) Workers will negotiate higher wages. B) Suppliers of resources will demand higher prices for their resources. C) Producers will prevent the price level from increasing and hurting their sales. D) Producers will raise prices.
Labor unions are restrained in their wage demands because:
A. legislation limits annual increases in nominal wages to 6 percent. B. the labor demand curve is downsloping. C. marginal wage cost curves lie above labor supply curves in most labor markets. D. most unions deal with monopsonists who have superior bargaining power.
An increase in congestion costs associated with a public good provided through clubs will _____
a. lead to new clubs being formed b. lead to a reduction in the optimal size of the club c. be unrelated to congestion costs d. lead to fewer clubs being formed