Provide two circumstances where monopoly may offer efficiency advantages over competition
The first is when production is characterized by economies of scale. One large firm can produce at lower average cost than could a number of smaller firms. Secondly, a monopoly payoff helps to spur innovation, whereas with competition, a producer could not recover the costs of research and development. More controversial advantages may be the rate of innovation, lower cost curves, and higher demand.
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
Scarcity occurs in both wealthy societies and poor societies
Indicate whether the statement is true or false
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
To achieve economic efficiency in energy use, an economy:
A. often uses a variety of energy sources. B. must use the single energy source in which it can achieve economies of scale. C. should use all energy sources in equal proportion. D. should only use domestically produced energy.