Consider an unregulated monopoly in Figure 13.2. Suppose that a second firm enters the market. As a result, if a natural monopoly is inevitable in this market:
A. the demand curve facing each firm lies entirely above the long-run average cost curve.
B. the demand curve facing each firm lies entirely below the long-run average cost curve.
C. the demand curve facing each firm touches the long-run average cost curve at one point.
D. None of these
Answer: B
You might also like to view...
Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?
A) because the slower-growing countries save too much B) because the annual growth rate is compounded over time C) because the faster-growing countries gain a political advantage over poorer countries, and use that advantage for their economic gain D) because the slower-growing countries don't export enough
The figure above shows that as a result of the tariff, the price of a T-shirt in the United States ________, and the quantity of T-shirts bought ________
A) rises by $2; decreases by 15 million per year B) rises by $2; increases by 15 million per year C) falls by $2; increases by 5 million per year D) does not change; decreases by 5 million per year E) does not change; does not change
In the Baumol-Tobin analysis of the demand for money, either an increase in ________ or an increase in ________ increases money demand
A) income; interest rates B) brokerage fees; interest rates C) interest rates; the price level D) brokerage fees; income
When firms discuss pricing strategies with each other:
A. it is a violation of antitrust laws. B. it is not a violation of antitrust laws because laws cannot restrict free speech. C. it is a violation of antitrust laws only if the discussion includes punishment strategies. D. it is a violation of antitrust laws only if some firms in the industry are excluded from the discussion.