Refer to the diagram. At output level Q 1 :
A. neither productive nor allocative efficiency is achieved.
B. both productive and allocative efficiency are achieved.
C. allocative efficiency is achieved, but productive efficiency is not.
D. productive efficiency is achieved, but allocative efficiency is not.
A. neither productive nor allocative efficiency is achieved.
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If a natural monopoly is allowed to set its price above its average total cost, then
A) the company makes an economic profit. B) the company incurs an economic loss. C) competitors will enter the market. D) the company will produce more than the efficient amount of output.
An increase in demand will increase prices least when supply is
A. inelastic (but not perfectly inelastic). B. unit elastic. C. perfectly inelastic. D. elastic.