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.
Ques. 2In order for a production possibilities curve to shift to the right, which of the following must occur?
A) government involvement
B) increasing consumer wants
C) economic growth
D) reductions in the supply of resources
Ques. 3Refer to the above figure. Which panels could represent the situation if the Fed had engaged in open market operations?
A) Panels A and B
B) Panels A and C
C) Panels B and C
D) Panels C and D
Ques. 4New growth theory supports the idea that I. economic growth can continue as long as we keep finding new ideas. II. increases in human capital can lead to greater rates of economic growth.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
Ques. 5In marginal cost pricing, the natural monopoly would have to set price equal to
A) AFC.
B) AVC.
C) ATC.
D) MC.
Ques. 6When the government sets a price floor which is above the equilibrium price
A) a surplus will develop.
B) a shortage will develop.
C) the equilibrium price will be maintained.
D) a price ceiling will follow.
Ques. 7The U.S. antitrust laws
A) aid monopolies in their quest to dominate the market for a good or service.
B) are outdated and rarely used anymore.
C) promote competition.
D) are administered by the Department of Commerce.
Ques. 8If an industry has 25 firms that collectively have 150 million in total sales and the top three firms in this industry account for 78 million in sales and the fifth through twenty-fifth firms account for 60 million in sales, what is the amount of
sales for the fourth largest firm? A) 12 million
B) 6 million
C) 18 million
D) none of the above
Ques. 9The acquisition of more than 10 percent of the shares of ownership in a company in another nation is called
A) portfolio investment.
B) gross private international investment.
C) foreign direct investment.
D) majority investment.
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