You overhear a businessman say: "We want to be big because there are economies associated with bigness." What he means is that
A. total fixed cost decreases as more is produced.
B. total cost decreases as more is produced.
C. marginal cost decreases as more is produced.
D. long-run average cost decreases as more is produced.
Answer: D
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The price elasticity of demand is equal to
A) the percentage change in quantity demanded divided by the percentage change in price. B) the change in quantity demanded divided by the change in price. C) the percentage change in price divided by the percentage change in quantity demanded. D) the value of the slope of the demand curve.
To be a natural monopoly, a firm must
a. control an essential natural resource input. b. be very large. c. have a continuously falling average cost curve as output rises. d. have falling average costs over a substantial range of total market demand.
When government agencies become privatized:
A. stock is created and sold to the public. B. private stock is sold to private households. C. they are sold to private companies. D. they are rarely regulated.
Status quo bias is the:
A. general resistance to change, often stemming from loss aversion. B. inefficiency that stems from constant change. C. inefficiency that stems from anchoring and adjustment. D. general enthusiasm for change, often stemming from regression to the mean.