The defining characteristic of a natural monopoly is
a. constant marginal cost over the relevant range of output.
b. economies of scale over the relevant range of output.
c. constant returns to scale over the relevant range of output.
d. diseconomies of scale over the relevant range of output.
Ans: b. economies of scale over the relevant range of output.
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Suppose a constant-money-growth-rate rule of 3 percent is being considered. If it is estimated that average annual Real GDP growth is 3.5 percent and it turns out that velocity is rising by 2 percent a year on average, the rule would produce an average annual rate of inflation of __________ percent
A) 1.5 B) 2.5 C) 3.0 D) 5.5 E) 2.0
The Scarcity Principle applies to:
A. firms primarily. B. everyone. C. poor people primarily. D. consumers primarily.
International market failures:
A. are equally likely to be solved in the presence or absence of a world government. B. are more likely to be solved in the presence of a world government. C. are less likely to be solved in the presence of a world government. D. do not occur in the presence or absence of a world government.
The real rate of interest is
A) the nominal interest rate plus the inflation rate. B) the nominal interest rate minus the inflation rate. C) the interest rate determined by the supply and demand in the money market. D) the nominal interest rate.