A monopoly   takes the market price as given and earns small but positive profits can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits can set the price it charges for its output and earn unlimited profits

A natural monopoly is one where   1.    Governments will create a minimum price in the market 2.  Companies are granted temporary monopolies to incentivize innovation 3.  It is cheaper for only company to provide for the entire market than many sellers   4. average fixed costs are low and average variable costs are high  

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market? 1. exactly $2.50 2. less than $2.50 3. more than $2.50 4. the marginal revenue cannot be determined without knowing the actual quantity sold by the typical seller    

An example of an explicit cost of production would be the   1.  cost of labor earnings from a previous job for an entrepreneur.   2.  lost opportunity to invest in capital markets when the money is invested in one’s business.   3.  lease payments for the land on which a firm’s factory stands.   4.  Both a and c are correct.

Karen’s cat causes Danny to Karen values her cat’s companionship at $300 per year. The cost to Danny of tissues and her allergy medication is $350 per year. Based on the Coase theorem,   Karen should pay Danny $350 for tissues and allergy medication Danny should pay Karen $325 to give away her cat Danny should move to another location Karen should pay Danny $400 so that she may keep her cat

The example of organ donations was used to the explain 1. the endowment effect 2. the paradox of choice 3. choice architecture 4. the power of default options

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that marginal cost of the third worker hired is $40, and the average total cost when three workers are hired is $50. What is the total cost of production when three workers are hired?   1.  $50   2.  $90   3.  $120   4.   $150

The term shutdown   and the term exit both refer to long-run decisions that a firm might make refers to a short-run decision that a firm might make, whereas the term exit refers to a long-run decision that a firm might make refers to a long-run decision that a firm might make, whereas the term exit refers to a short-run decision that a firm might make and the term exit both refer to short-run decisions that a firm might make  

Anchoring bias occurs when: 1. Individuals rely too heavily on the first piece of information encountered when making decisions. 2. Individuals ignore relevant information and focus solely on recent events. 3. Individuals are influenced by others’ behaviors and decisions. 4. Individuals consistently overestimate the likelihood of rare events occurring.

A positive externality arises when a person engages in an activity that has   an adverse effect on a bystander who is compensated by the person who causes the effect a beneficial effect on a bystander who pays the person who causes the effect a beneficial effect on a bystander who does not pay the person who causes the effect an adverse effect on a bystander who is not compensated by the person who causes the effect