A natural monopoly that is NOT regulated will choose to produce at the
A) minimum point of the long-run average cost curve.
B) point at which marginal cost is above average total cost.
C) point at which the demand curve intersects the long-run average cost curve.
D) point at which marginal revenue equals marginal cost.
Answer: D
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When external costs are present,
A) competitive, unregulated markets are efficient. B) transaction costs will be high. C) a tax might be able to create efficiency. D) property rights have already been established.
The growth rate of productivity is the most important determinant of material well-being in the short run.
Answer the following statement true (T) or false (F)
Which of the following would be but best item for the local government to tax if its goal was to raise revenue?
A. Water supply B. Weather reports on your phone C. Outdoor concert provided by the city D. Leaf collection
Which of the following is a form of government intervention designed to correct market failures?
a) Public goods. b) Externalities. c) Antitrust laws. d) Laissez faire.