If regulators impose marginal-cost pricing on a natural monopoly, a possible problem is that
a. the firm will lose money and exit the market.
b. the firm will make excessive profits.
c. consumers will buy more of the good than is efficient.
d. consumers will buy less of the good than is efficient.
Ans: a. the firm will lose money and exit the market.
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Tom spends all his income on comics and cola and maximizes his total utility. If the price of a comic is $4 and the price of a can of cola is $1, then the ratio of the ________ is 4
A) marginal utility from cola to the marginal utility from comics B) marginal utility from comics to the marginal utility from cola C) number of comics Tom buys to the number of cola Tom buys D) total utility from comics to the total utility from cola
In the crowding-out effect, ______.
a. government purchases increase interest rates, which crowd out investment and consumer spending and shift the aggregate demand curve to the left b. higher interest rates increase investment and consumer spending, which crowd out government purchases and shift the aggregate demand curve to the left c. government purchases lower interest rates, which crowd out unemployment and inflation and shifts the aggregate demand curve to the right d. low interest rates lead to increased government spending, which is crowded out by investment and consumption spending and shifts the aggregate demand curve to the right
Studies by the U.S. Census Bureau have shown that
A) there is significant income mobility in the U.S. over time. B) families remain below the poverty line for an average of five years. C) income mobility in the U.S. is minimal. D) over half the people below the poverty line never move out of poverty.
If firms in a perfectly competitive industry are earning positive economic profits, then what will happen in the long run?
What will be an ideal response?