Which of the following is true?
a. Voluntary trades give both parties more in value than what they give up
b. Without the ability to trade, people would not tend to specialize as much in those areas where they had a comparative advantage.
c. People can gain by specializing in the production of the good in which they have a comparative advantage.
d. All of the above are true.
d
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Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's average total cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is $4
If Gene is regulated using a marginal cost pricing rule, the price he is allowed to charge to wash 100 cars is A) $10. B) $8. C) $6. D) $4. E) $400.
The above figure represents a restaurant operating in monopolistic competition
a. What is the profit-maximizing level of output? b. What price will the firm charge? c. What is the firm's profit (or loss)? d. Is this a long-run equilibrium? Why or why not? e. Is this firm producing its efficient scale of output?