Comment on the following statement: "In order for a natural monopoly to be present, economies of scale must be realized at a scale that is close to total demand in the market."
What will be an ideal response?
The statement is true. If economies of scale are exhausted at an output level of 500,000 units, having only one firm producer in the market is efficient as long as total demand is 500,000 units. If total demand was 5 million units, the market would be better served by ten firms rather than one.
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An increase in the currency drain ratio ________
A) decreases the size of the money multiplier B) increases the size of the money multiplier C) increases the deposits in all banks D) decreases the size of the monetary base E) increases the size of the monetary base
A rational individual would rather receive $5,000 today than receive $6,000 in one year if the applicable nominal interest rate was 10%
a. True b. False Indicate whether the statement is true or false
Which of the following would be most likely to cause an outward shift of the demand curve for electricity?
a. a decrease in the price of electricity b. an increase in the price of air conditioners c. an increase in the price of heating oil d. a decrease in the price of natural gas
The argument that foreign trade should be restricted to protect domestic employment and output is based on the idea that:
A. consumers are willing to pay higher prices for domestic goods. B. producers will not exploit reduced foreign competition by charging higher prices. C. foreign companies are more costly to deal with than domestic companies. D. sales of imports come at the expense of domestic goods and jobs.