Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?

a. The marginal cost is equal to $10 .
b. The marginal cost is equal to $.01.
c. The marginal cost is equal to $1.01.
d. The marginal cost is rising.
e. The marginal cost is falling.

B

Economics

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Natural monopolies have all of the following characteristics except

a. relatively high fixed cost b. relatively low average variable cost c. low levels of production d. difficulty for new firms to enter e. only one firm can produce profitably

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The effect of a tariff or a quota is to

A. raise the price of a commodity in the exporting country above the price in an importing country. B. raise the price of a commodity in an importing country above the price in the exporting country. C. lower the price of the commodity in all countries. D. raise the price of the commodity in all countries.

Economics