A natural monopoly exists when
A) control of a key input leads to a single-firm industry.
B) increasing marginal returns and the ability to obtain quantity discounts from suppliers leads to a single-firm industry.
C) economies of large-scale production are substantial, leading to a single-firm industry.
D) the government restricts entry that leads to a single-firm industry.
Answer: C
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If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the
A) short-run average total cost curve shifts upward because all inputs have increased. B) firm moves along its short-run average total cost curve. C) firm experiences economies of scale. D) long-run average cost curve shifts downward.
In the above figure, what is the wage rate for the perfectly competitive market?
A) W1 B) W2 C) W3 D) W4