Briefly explain how economies of scale are present in a natural monopoly.
What will be an ideal response?
The situation in which one large firm can provide the output of the market at a lower cost than two or more smaller firms is called a natural monopoly. With a natural monopoly, it is more efficient to have one firm produce the good. The reason for the cost advantage is economies of scale; that is, ATC falls as output expands throughout the relevant output range.
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Bonds issued by state and local governments are called _____ bonds. Bonds issued by financially shaky corporations are called _____ bonds. Of these two, which type of bond usually pays a relatively higher interest rate?
Fill in the blank(s) with correct word
Answer the following statements true (T) or false (F)
1. Imports and exports are examples of financial flows. 2. When a U.S. firm purchases a Hungarian metal plant, this is an example of a capital resource flow. 3. In terms of combined volume of imports and exports, China was the world's leading trading nation in 2012. 4. A trade deficit occurs when government spending exceeds tax revenues. 5. One leading export of the United States is agricultural products.