Suppose That You Build a High-Speed,magnetically Powered Transportation System from Toronto

question 8

Multiple Choice

Suppose that you build a high-speed,magnetically powered transportation system from Toronto to Vancouver,and you are the only firm providing this service.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly is the result of your:

• A) control of a scarce resource or input.
• B) technological superiority.
• C) increasing returns to scale.
• D) use of government-set barriers.

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Definitions:

Price of X

The cost at which a specific item or commodity, denoted as "X," is sold in the market.

Marginal Rate of Substitution

The exchange rate between goods that allows a consumer to trade off one product for another without altering their overall happiness.

Convex Preferences

A characteristic of consumer preference whereby a consumer prefers combinations or mixtures of goods over extreme amounts of single goods, displaying a preference for diversification.

Indifference Curve

A graph showing a combination of two goods that give a consumer equal satisfaction and utility, demonstrating the consumer's preference.