A firm is more likely to have a natural monopoly when:
A. the size of the market is small relative to the efficient scale of the firm.
B. the size of the market is large relative to the efficient scale of the firm.
C. the firms face no or low fixed costs.
D. the government grants the firm an exclusive license to operate.
Answer: A
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Final goods or services used to compute GDP refer to: a. the sum of all wages paid to laborers
b. the factors of production used to produce output. c. goods and services purchased by the ultimate users. d. the value of outstanding shares of stock of manufacturing firms.
Under perfect competition in the long run, price is equal to
A. marginal revenue. B. marginal cost. C. average total cost. D. All of the choices are equal to price under perfect competition.
Increases in long-run average cost that result from output increases is
A) the law of diminishing marginal product. B) economies of scale. C) constant returns to scale. D) diseconomies of scale.
The overall behavior of the economy:
A. is remarkably stable over time. B. differs over time as prices become increasingly flexible in the months and years following a shock. C. differs over time as prices become increasingly sticky in the months and years following a shock. D. is easily controlled and stabilized by government policy.