In the Absence of Any Government Regulation on Price,if a Firm

question 75

Multiple Choice

In the absence of any government regulation on price,if a firm has no power to set price on its own,one can safely conclude

• A) the demand curve for the firm's product is horizontal.
• B) there aren't many firms in the industry.
• C) the market is in long-run equilibrium.
• D) the firms in this industry are not profitable.

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Definitions:

AC

Short for Alternating Current, a type of electrical current where the flow of electric charge periodically reverses direction.

MC

Marginal Cost, the increase in total cost that arises from producing one additional unit of a product or service.

Natural Monopoly

A type of monopoly that arises due to high fixed or start-up costs associated with a business which makes it impractical for more than one firm to produce the same product or service efficiently.

Fixed Costs

Costs that do not vary with the level of production or business activity, such as rent, salaries, and insurance, remaining constant regardless of output.