As the economy recovers from a recession, we should expect that
a. demand for inferior goods will fall and demand for normal goods will rise
b. demand for both inferior and normal goods will rise
c. demand for inferior goods will rise and demand for normal goods will fall
d. demand for both inferior and normal goods will fall
e. demand for complements will fall
A
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If a natural monopoly does not inflate its costs, the output it produces is the smallest when the monopoly is
A) left unregulated. B) regulated according to an average cost pricing rule. C) regulated according to a marginal cost pricing rule. D) regulated to maximize total surplus.
The recent Enron and Tyco scandals are an example of
A) the free-rider problem. B) the adverse selection problem. C) the principal-agent problem. D) the "lemons problem."