If a severe natural disaster reduced the population of a city, one would expect a natural monopoly to:
A. raise prices.
B. split into two firms.
C. increase sales.
D. merge with a competitor.
Answer: A
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The figure above shows the situation facing Smart Digit, Inc, a firm in monopolistic competition that produces calculators. What quantity does the firm produce?
A) 200 calculators per day B) 300 calculators per day C) more than 300 calculators per day and less than 400 calculators per day D) 400 calculators per day
A competitive market is in equilibrium. Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese ________, and the equilibrium quantity of cream cheese ________.
A) rises; decreases
B) rises; increases
C) falls; decreases
D) does not change; does not change
E) falls; increases
Suppose a shortage for good X exists. Given this information, we know that
A. a government price floor should be imposed above the current price so that the market can work more effectively. B. a government price ceiling should be imposed above the current price so that the market can work more effectively. C. the price of good X will tend to rise toward the equilibrium level. D. the price of good X will tend to fall toward the equilibrium level.
The following is budget information for a hypothetical economy. All data are in billions of dollars.
Refer to the above table. The budget deficit was $75 billion in:
A. Year 2
B. Year 3
C. Year 4
D. Year 5