In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does not inflate its costs, then the firm will produce

Which of the following will cause demand to be relatively elastic?

a. There are few substitutes b. The time interval is relatively long c. The good is considered a necessity d. The good involves a relatively small portion of the consumers' budget e. The time interval is relatively short

Which of these statements correctly explains the shape of the aggregate demand curve? a. As prices fall, nominal income rises and so does the demand for real goods and services

b. Rising prices reduce people's wealth and thereby decrease spending. c. With falling prices, government decides to spend less to increase the price level. d. Businesses increase investment spending in response to higher interest rates caused by inflation. e. As prices fall, domestically produced goods become more expensive relative to foreign goods, resulting in an increase in production.