Answer to Question #183410 in Macroeconomics for James

Question

5

When economies of scale are large relative to the quantity demanded in the market, it is:

1. Bad for society.
2. Unnatural competition.
3. A natural monopoly.
4. Difficult to find a company willing to produce that product.
5. Impossible to find a company willing to produce that product.

6

Natural monopolies often arise in industries where:

1. The product is illegal.
2. The marginal cost of adding an additional customer is very low.
3. The marginal cost of adding an additional customer is very high.
4. The average cost of production is very low.
5. The average cost of production is very high.

7

One producer can serve the entire market more efficiently than a number of smaller producers:

1. In competitive markets.
2. In any monopoly.
3. Because of a fish’s scales.
4. Because of economies of scale.
5. Because of fish’s tales.

8

This occurs when the government erects barriers to entry by prohibiting or limiting competition.

1. Firms choose to exit the market.
2. Firms choose to enter the market.
3. Legal monopoly.
4. Illegal monopoly.
5. All of the above.

Answer 1

1. A natural monopoly.

2. The marginal cost of adding an additional customer is very low.

3.Because of economies of scale. 4. Legal monopoly.