Question

30. Economies of scale refer to: 

a. the minimum point on the short-run average total cost curve.

b. the flat portion of the long-run average total cost curve.

c. a decrease in the long-run average total cost of production as output increases.

d. a and b.

 

31. With a natural monopoly, the price a single firm must charge to make a profit:

a. is lower than the price two or more firms would have to charge.

b. is always higher than the price two or more firms would have to charge.

c. is equal to the price of two or more firms would have to charge.

d. is half the price two or more firms would have to charge.

 

32. The long-run average cost curve is typically:

a. downward-sloping at first but then upward-sloping.

b. upward-sloping at first but then downward-sloping.

c. always downward-sloping.

d. always upward-sloping.

 

33. According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will be equivalent to the competitive price. 
True or False?

 

34. In the theory of perfect competition:

a. the market demand curve is horizontal (i.e. elastic).

b. the single firm's demand curve is horizontal (i.e. elastic).

c. the single firm's demand curve is downward sloping.

d. a and b.