If the government wants to regulate a natural monopoly while ensuring the firm does not earn profits or require subsidies, the government will force the firm to set price equal to
A) average cost.
B) marginal cost.
C) marginal revenue.
D) None of the above.
A
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Minimum efficient scale is the level of output at which
a. short-run average total cost stops decreasing b. short-run average total cost stops increasing c. long-run average cost stops decreasing d. long-run average cost stops increasing e. profit stops increasing
Which of the following is an example of asymmetric information?
a. A student adopting unfair means to complete his/her assignment. b. A commodity trader buying goods at a low price and selling them off at a high price. c. A builder selling houses built on property that is zoned for industrial use. d. A buyer paying a pre-contracted price which is lower than the current market price.
Other things the same, if the price level rises, then domestic interest rates
a. rise, so domestic residents will want to hold more foreign bonds. b. rise, so domestic residents will want to hold fewer foreign bonds. c. fall, so domestic residents will want to hold more foreign bonds. d. fall, so domestic residents will want to hold fewer foreign bonds.
The number of people who have gray hair is very high among residents living in Florida. A student concludes that living in Florida causes hair to turn gray. What is the flaw in this student's reasoning?
A) The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents. B) The student is using an inadequate sample size. C) The student is drawing a false conclusion; he is confusing cause and effect. D) The student has failed to take into account other causes of gray hair.