In the presence of asymmetric information,
A) all contracts are efficient.
B) efficiency in risk bearing cannot be achieved.
C) a trade-off exists between risk-bearing efficiency and production efficiency.
D) no contracting will take place.
C
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In a natural monopoly, throughout the range of market demand,
a. marginal cost exceeds average cost and therefore pulls average cost upward b. average cost exceeds marginal cost and therefore pulls marginal cost upward c. marginal cost is below average cost and therefore pulls average cost downward d. average cost is equal to marginal cost e. there are diseconomies of scale
A profit-maximizing monopolist
a. never produces on the inelastic portion of the demand curve because it can increase profit by increasing output b. never produces on the inelastic portion of the demand curve because marginal revenue exceeds marginal cost c. always produces on the inelastic portion of the demand curve d. never produces on the elastic portion of the demand curve because there are no substitutes for the good it produces e. never produces on the inelastic portion of the demand curve because marginal revenue is negative there