At his profit-maximizing level of output, a monopolist's average total cost curve is tangent to his demand curve. The monopolist
a. is earning a negative economic profit.
b. may or may not be earning a negative economic profit.
c. is earning zero economic profit.
d. is earning a positive economic profit.
c
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A good is characterized by network economies if it:
A. becomes more valuable as more people own it. B. is widely advertised on television. C. can be used by more than one person at a time. D. becomes cheaper to produce as more people buy it.
Suppose an economist collects the following data between May and December of a given year: gasoline prices rose sharply, consumer incomes remained constant, consumers purchased more fuel efficient vehicles than in the previous year, the size of the population did not change, sales of gasoline decreased by 15 percent. Which of the following theories could be tested with this information?
A. When the price of gasoline rises, gasoline purchases fall. B. When consumer incomes rise, gasoline purchases rise. C. When the population increases, purchases of fuel efficient vehicles increase. D. No economic theory could be tested with this information.
Which of the following is not an advantage of starting a new business as a corporation?
A) separation of ownership and business liability B) enhanced ability to raise funds C) ability to share risks D) possibility of double taxation
If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be
A. a negatively sloped straight line. B. negatively sloped and "bowed inward" toward the origin. C. negatively sloped and "bowed outward" from the origin. D. a positively sloped straight line.