If a natural monopoly increases the quantity of output it produces, then:
A. its profit will increase.
B. its average cost will decrease.
C. its average cost will increase.
D. it will have to increase its price.
Answer: B
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According to the graph shown, consumer surplus is:
A. $10.
B. $15.
C. $20.
D. $30
Suppose Morris earns $50 per week at his job and chooses to spend all of his income on either apples or biscuits. Suppose apples cost $5 per pound and a pack of biscuits costs $2 each. Which combination of fruits and biscuits will lie on Morris's budget constraint?
a. 6 pounds of apples and 12 packs of biscuits b. 6 pounds of apples and 12 packs of biscuits c. 5 pounds of apples and 8 packs of biscuits d. 8 pounds of apples and 5 packs of biscuits
Firms buy new capital goods only if they expect this investment to yield:
a. a higher return than other possible uses of their funds. b. the same return as other possible uses of their funds. c. no return as compared to other uses of their funds. d. a lower return than other possible uses of their funds.
One HEADLINE article in the text suggest that 30 percent of Americans trust the federal government to do the right thing. If government intervention makes the economy worse off, this is referred to as:
A) Government failure. B) Market failure. C) Central planning. D) Scarce resources.