If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost, this will result in
A) excessive economic profits to the monopoly.
B) normal economic profits to the monopoly.
C) losses to the monopoly.
D) either economic profits or losses, depending on the efficiency of the monopoly.
C
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Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. If Dave buys 20 magazines per week, which of the following amount of pizza is not affordable to him?
A) 10 B) 20 C) 9 D) All of the above answers are correct because none of the listed amounts of pizza are affordable.
Under the rational expectations hypothesis, which of the following is the most likely short-run effect of a move to expansionary monetary policy?
A. a higher general level of prices but no change in real output B. a higher general level of prices and an expansion in real output C. no change in the general level of prices and a reduction in real output D. no change in either the general level of prices or real output