Briefly explain how American railroads lost their transportation monopoly.
What will be an ideal response?
Early in the last century, railroads had strong monopoly power, but they did not spend much on research or development; they did not aggressively try to improve rail transport. Consequently, technical advances in substitute modes of transportation—like cars, trucks, and airplanes—led to a loss of monopoly power for the railroads.
You might also like to view...
A busy country store is the only producer and distributor of maple sausages in New Hampshire. It calculates that if it sets MR = MC, it will sell 2,000 sausages at a price of $10 and make a total economic profit of $6,000 . Instead, the store decides to charge a price of $8 . We can infer that the store
a. is lowering the price so that it can earn more than $6,000 total profit b. is operating in a contestable market so it is pricing the sausages to keep out competition c. will now sell fewer sausages according to the law of demand d. is now operating at a loss of $1 per sausage e. hopes that its demand is inelastic so that total revenue will increase
On the Internet you find the following offers for opening an online account. Which of them is the best offer if you have $2,000 to save for two years?
a. an interest rate of 5 percent, with the bank charging you a $15 processing fee at the time you open your account b. an interest rate of 3.5 percent, with the bank giving you a $35 bonus to open your account c. an interest rate of 4 percent, with the bank giving you a $20 bonus at the time you open your account d. an interest rate of 4.5 percent, with no processing fee and no bonus
Why do economists avoid basing theories on the responses of a few individuals?
a. Individual responses are often incomplete. b. Individuals hate being tested. c. Individuals rarely know what they want. d. Individual responses are unpredictable.
Define the "consumption function."
What will be an ideal response?