Which of the following statements regarding an average-cost pricing rule for a natural monopoly is WRONG?
A) It sets price equal to average total cost.
B) It is efficient.
C) The firm makes zero economic profit.
D) More output is produced than if the firm maximized profit.
B
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Suppose the measured unemployment rate is 7.4% and the natural rate of unemployment is 5.1%. In this situation, policymakers should
A) attempt to stimulate the economy. B) attempt to slow the economy. C) not intervene in the economy. D) The actions of policymakers will depend on how much of the natural rate is frictional unemployment and how much is structural unemployment.
Under EPA regulations, a factory
a. must pay for the right to pollute. b. can increase air pollution from its grinding process if it decreases air pollution from its smelting process. c. cannot under any circumstances build a polluting factory in an area where pollution standards are not being met by existing firms. d. None of the above is correct.
The United States produces some of the electronic components used as inputs in its fighter planes. But due to the limited number of companies that produce these items, it imports these parts from Japan as well. There is concern that in the case of a prolonged war, these important imports may not be available. Fearing that the Air Force may be unable to fulfill its tasks in the case of a prolonged war, the specificity rule suggests that the United States should
A. ban the importation of these electronics parts to protect jobs in this industry. B. subsidize the domestic production of these electronics parts. C. impose tariffs on the imports of these electronic parts. D. impose high taxes on the production of these electronic parts.
When a competitive equilibrium is achieved in a market
A) all individuals are better off than they would be if a price ceiling or price floor was imposed by government. B) the total net benefit to society is maximized. C) the total benefits to consumers are equal to the total benefits to producers. D) economic surplus equals the deadweight loss.