In order for a natural monopoly to develop, it
A. is important that the firm be very large.
B. is important that the firm prices its product below cost.
C. is not the absolute size of the firm but its size relative to the total market demand that is important.
D. must be in the presence of government intervention.
Answer: C
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When does it make sense to run a trade deficit?
a. It never makes sense because a trade deficit is the same as borrowing, which hurts the economy. b. It makes sense when the financial inflow is used to pay for projects with short-run pay-offs, such as summer camps. c. It makes sense when the financial inflow is used to pay for projects with long-run pay-offs, such as the U.S. highway system. d. It does not make sense unless the majority of people in the economy want to go into debt.
We observe a market where the price has risen and the quantity being sold has declined. This could be caused by a(n):
a. Increase in demand b. Increase in supply c. Decrease in demand d. Decrease in supply
In order to prove that Dr. Pepper and 7-Up are substitutes, economists should test the ____ and get a ____.
A. price elasticity of demand; number less than 1 B. income elasticity; positive number C. cross-price elasticity; positive number D. price elasticity of demand; number greater than 1
During the 20th century and into the 21st, the U.S. net international investment position has
A. been consistently negative. B. gone from negative to positive and back to negative. C. been consistently positive. D. gone from positive to negative and back to positive.