A natural monopoly exists when
A) the firm holds a patent.
B) there are governmental entry restrictions.
C) the firm owns all of the raw materials needed to produce the product.
D) economies of scale occur.
Answer: D
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If your demand for gasoline is inelastic, when the price of gasoline falls, which of the following occurs?
A) Your demand curve for gasoline will shift leftward. B) Your demand curve for gasoline will shift rightward. C) Your total expenditure on gasoline will increase. D) Your total expenditure on gasoline will decrease.
In the market for insurance,
A) buyers often have more information than sellers. B) sellers are protected from lawsuits brought by buyers. C) demand is perfectly inelastic because, by law, home owners and automobile drivers must have insurance. D) sellers often have better information than buyers.