When Economies of Scale Exist So That One Firm Can

question 79

Multiple Choice

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

• A) a natural monopoly develops.
• B) the monopoly encounters competition.
• C) economic profit is reduced to zero.
• D) the monopoly converts all of the consumer surplus into economic profit.
• E) there is always the opportunity to price discriminate.

Analyze the role of financial institutions as intermediaries between savers and borrowers.

Understand the factors that influence the value and acceptance of fiat money.

Explain how money facilitates commitments for future payments.

Understand the relationship between money supply, inflation, and the purchasing power of money.