In average cost pricing, the natural monopoly would have to set price equal to
A) AFC.
B) AVC.
C) ATC.
D) MC.
Answer: C
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Assume the demand for sugar decreases and the supply of sugar increases. Which of the following outcomes is certain to occur?
A. The equilibrium quantity of sugar will rise. B. The equilibrium price of sugar will rise. C. The equilibrium quantity of sugar will fall. D. The equilibrium price of sugar will fall.
If the price of the good measured on the horizontal axis is subject to volume discounts, then:
A. the budget line will get steeper as the consumer moves along it from left to right. B. the budget line will get flatter as the consumer moves along it from left to right. C. the indifference curve will get steeper as the consumer moves along it from left to right. D. the indifference curve will get flatter as the consumer moves along it from left to right.
If resources are combined efficiently in production, then the society
A) is experiencing economic growth. B) is producing at a point outside the production possibility frontier. C) is producing at the most-desirable point on the production possibility frontier. D) is producing at a point on the production possibility frontier but not necessarily at themost-desirable point.
The difference between capitalism and mercantilism is that under capitalism:
A. industrialists' views are represented by craft guild organizations. B. the state plays a more active role in coordinating economic activity. C. craft guilds rather than merchants own capital. D. the invisible hand is more important than the government.