A natural monopoly results when a firm has
a. a license
b. a patent
c. official approval to produce a product
d. decreasing average costs over the range of market demand
e. exclusive use of a natural resource
QUESTION 2The idea that paying higher wages attracts a more talented labor pool is called the
a. winner's curse
b. efficiency wage theory
c. marginal productivity theory
d. lemons problem
e. theory of the second best
QUESTION 3If every firm is a price taker, then which of the following characteristics does their industry have?
a. large number of sellers
b. many versions of the product
c. limited resource mobility
d. few consumers
e. market power
QUESTION 4Which of the following would probably not be considered a natural monopoly?
a. a municipal water company
b. the local telephone industry
c. the cable television industry
d. natural gas and electric companies
e. the automobile industry
QUESTION 5Adverse selection is a situation in which
a. only men are hired for particular jobs
b. comparable worth laws actually reduce the number of women in certain professions
c. people who use illegal drugs apply for jobs where employers do not use drug testing
d. employers have a better knowledge of the productivity of labor suppliers than do the labor suppliers
e. employers attempt to quantify the productivity of their workers
QUESTION 6Perfectly competitive firms are price takers because
a. each firm is too small compared to the market to be able to affect price
b. one firm determines price and all other firms accept this price
c. firms take the price that government determines
d. firms must accept any price consumers offer them
e. firms earn high profits by taking consumers
QUESTION 7Which of the following could not bar entry into an industry?
a. economies of scale
b. diseconomies of scale
c. patents
d. licenses
e. one firm's control of essential resources
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