The Bay Area in California is home to the Oakland Athletics and the San Francisco Giants. New York City is home to the Mets and Yankees. Most other cities only have one baseball team, if any at all. What is the best explanation for this phenomenon?
a. Most baseball fans, who are the demanders for baseball games, tend to live in New York and San Francisco
b. Baseball team owners live in large cities, such as New York and San Francisco.
c. In most baseball cities—excluding New York, San Francisco, etc.—baseball teams are natural monopolies.
d. Only these four teams face downward-sloping demand curves.
e. Only these four teams have declining average total costs.
C
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Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli. If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch, then
A) the CPI decreases. B) the CPI does not change. C) the CPI increases. D) the CPI might increase or decrease depending how the quantities are affected by the price changes. E) There is not enough information to answer this question.
Which of the following arguments is often used by opponents of Federal Reserve independence?
A) Independence slows the policy decision process. B) Independence causes inflationary pressures to build because of excessive monetary growth. C) Independence leads to conflicts between monetary and fiscal policy. D) Independence causes a concentration of financial power.