A firm is a natural monopoly if ________
A. it can produce the good at a price below its competitor's price
B. it can produce a larger quantity of the good than other firms could
C. the government grants it a public franchise or patent
D. it can satisfy the market demand at a lower average total cost than other firms can
D Answer D is the definition of a natural monopoly.
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Related to the Economics in Practice on page 281: The foreign visitors to the temples of Laos are typically much richer than the local Laotians. This tends to make the foreign visitors ________ buyers when it comes to ticket prices to enter the temples.
A. perfectly elastic B. less elastic C. perfectly inelastic D. more elastic
Adverse selection can occur when
A) all persons involved in a transaction have full information. B) one person has information not available to others. C) post-agreement incentives result in workers shirking. D) nobody has any information about a particular product.