A natural monopoly owes its existence to
A) control of a key input.
B) persistently declining long-run average costs as scale increases.
C) patents.
D) increasing marginal returns and the ability to obtain quantity discounts from suppliers.
Answer: B
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In the market for money, an interest rate below equilibrium results in an excess ________ money and the interest rate will ________
A) demand for; rise B) demand for; fall C) supply of; fall D) supply of; rise
If firms in monopolistic competition are earning short-run profits,
a. barriers to entry will allow the profits to continue in the long run. b. total supply in the market will decrease in the long run as firms reduce output to keep prices high. c. the entry of new firms will eliminate the profits in the long run. d. each existing firm will experience an increase in its average revenues in the long run.
Which of the following conclusions is not supported by the Three-Sector-Model?
a. A decrease in borrowing causes the real risk-free interest rate and equilibrium quantity of real loanable funds to fall. b. An increase in the supply of a nation's real loanable funds reduces the real risk-free interest rate and decreases the equilibrium quantity of real loanable funds. c. An increase in a nation's demand for goods and services within the intermediate range results in an increase in the real GDP and a higher GDP Price Index. d. An increase in the value of a nation's currency encourages domestic imports and discourages exports. e. All of the above are supported by the Three-Sector Model.
Matteo prepares dinner for his family on Tuesdays and Fridays. Which of the following categories excluded from the GDP does this example belong to?
a. underground economy b. nonmarket transactions c. leisure d. externalities