Which of the following is not a limitation that regulators face when they implement average cost pricing?
a. Average cost pricing provides little or no incentive for firms to keep costs down.
b. The accurate calculation of a firm's costs is difficult.
c. Decisions are political and often influenced by special interests.
d. All of the preceding are limitations faced by regulators implementing average cost pricing.
Ans: d. All of the preceding are limitations faced by regulators implementing average cost pricing.
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Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?
A) Marginal cost will be minimized. B) It will minimize average total cost. C) Its economic profit will be zero. D) It will charge a price equal to marginal cost.
________ typically lead to increases in ________
A) decreases in interest rates; investment B) increases in disposable income; consumption C) increases in autonomous investment; investment D) all of the above E) none of the above
If frictional unemployment increased, but structural unemployment decreased by more, the natural rate of unemployment:
a. Would increase b. Would not change c. Would decrease d. Would be affected in an unpredictable manner
In a situation where there is no incentive to cut pollution because it will make domestic firms less competitive, it will improve world welfare if:
a. nations impose tariffs on polluters. b. there is an international agreement so that every nation regulates global pollutants and no firms have competitive advantages because of lax pollution laws. c. there is a ban on production until we can scientifically solve our pollution problems. d. we allow the market to work in this case.