A natural monopoly exists when:
A. unit costs are minimized by having one firm produce an industry's entire output.
B. several formerly competing producers merge to become the only firm in an industry.
C. short-run average total cost curves are tangent to long-run average total cost curves.
D. minimum efficient scale is attained at a small level of output.
Answer: A
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An optimal allocation of resources is one which is
A. unfair. B. fair. C. efficient. D. inefficient.
Suppose when the price of pineapples goes from $5 to $3 per pineapple, production decreases from 3,500 pineapples to 2,000 pineapples per year. Using the mid-point method, the percentage change in price would be:
A. 0.50 B. 54 percent C. -50 percent D. 0.54
Suppose policy makers implement a fiscal expansion that is not fully anticipated by financial market participants. We know that this will
A) always cause stock prices to fall. B) always cause stock prices to rise. C) tend to cause stock prices to rise if the LM curve is very flat. D) tend to cause stock prices to rise if the LM curve is vertical.
Kimberly decides to go back to college full time at the age of 30, and finds herself with a much lower income than she was earning before. Now that she has less income, she finds herself eating less steak and more pasta than ever before. We can conclude:
A. steak and pasta are both inferior goods, because they are both food she eats regardless of her income; also, pasta is an inferior good because her demand increased when her income went down. B. steak and pasta are both normal goods, because they are both food she eats regardless of her income. C. steak and pasta are both inferior goods, because they are both food she eats regardless of her income. D. pasta is an inferior good because her demand increased when her income went down.