If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the deadweight loss will be

Economists have found that the price elasticity of demand for water is higher in the summer than in the winter. Why is this likely to be so?

A. Winter water use tends to be for necessities such as cleaning and cooking, and summer water use tends to be for both necessities and non-necessities such as gardening and recreation. B. Winter is longer than summer, and price elasticity is lower over longer time horizons. C. Summer is longer than winter, and price elasticity is higher over longer time horizons. D. People take more vacations in the summer and so use less water at home.

Monetary policy designed to counteract a reduction in aggregate demand might include

A. a sharp increase in short-term interest rates. B. an increase in the money stock. C. an increase in individual income tax rates. D. increased government-infrastructure spending.