Property rights are relatively secure and free from the threat of nationalization in the HPAE

The marginal cost to the phone company of handling a long distance call is likely to be

A) higher the fewer such calls people make. B) higher the more the phone company has invested in equipment. C) substantially less than the price charged for the call. D) substantially more than the price charged for the call.

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. Which of the following events would cause the price differences in these letters to get smaller?

A) The demand for Lincoln letters decreases and the demand for Booth letters increases. B) The demand for Booth letters increases. C) The demand for Lincoln letters increases and the supply of Booth letters increases. D) The supply of Lincoln letters increases.