If a firm is a natural monopoly, competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit. How are prices usually set in natural monopoly markets in the United States?
A) Natural monopolies are privately owned and are allowed to set their own prices. Government regulation of the firms would result in greater deadweight losses.
B) Local or state regulatory commissions usually set prices for natural monopolies.
C) Natural monopolies are privately owned, but prices proposed by the firms must be approved by the Antitrust Division of the Department of Justice.
D) Each natural monopoly is made a public franchise. The public franchise is then required to set its price equal to its marginal cost.
B
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Use the following data to answer the next question. The disposable income (DI) and consumption (C) schedules are for a private, closed economy (an economy with no government and no international trade). All figures are in billions of dollars.Disposable IncomeConsumption$0$88080160152240224320296400368The marginal propensity to save in this economy is
A. 0.9. B. 0.1. C. 0.8. D. 0.72.
When the price level falls, consumers may feel wealthier and the consumption function will shift upward
a. True b. False Indicate whether the statement is true or false
If the nominal interest rate is 5 percent and there is a deflation rate of 3 percent, what is the real interest rate?
a. 8 percent b. 2 percent c. 15 percent d. 1.7 percent
What is comparative advantage? What is absolute advantage?
What will be an ideal response?