The problem posed by a natural monopoly is that it faces a _____ This means that _______?

A. Increasing average cost curve, marginal cost lies above average cost
B. Increasing average cost curve, marginal cost lies below average cost
C. Decreasing average cost curve marginal cost lies above average cost
D. Decreasing average cost curve, marginal cost lies below average cost

If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are ?

A. complements
B. inferior goods
C. normal goods
D. none of these answers

The law of supply states that an increase in the price of a good ?

A. None of these answers
B. Increases the quantity supplied of that good
C. Increase the supply of that good
D. Decrease the demand for the good

Externalities arise because there is a divergence between ________ and _________?

A. Private costs, private benefits
B. Private costs, social costs or benefits
C. Social costs, social benefit
D. Insiders, outsiders

Markets sometimes fail to exist because of________?

A. Externalities
B. The free-rider problem
C. A and b
D. A and c

If the consumption of good by one person does not reduce the quantity available by others and nobody can be easily excluded from consumption, we are referring to a ?

A. Private good
B. Merit good
C. Public good
D. Abundant good

Except for taxes to offset ______ taxes are ______?

A. Imperfect competition popular
B. Externalities , distortionary
C. Inequality , a first best option
D. Poor health, unnecessary

Taxes creates a wedge between the sales price and purchase price that prevents the price system equating ____ and ______?

A. Marginal costs, marginal benefits
B. Demand, supply
C. Marginal cost, marginal revenue
D. Marginal cost, average cost

The effect of a tax to offset a negative externality will be to ____ price and ______ quantity?

A. Reduce , reduce
B. Increase, increase
C. Increase, reduce
D. Reduce, increase

We cannot say whether one allocation of resources is better than another allocation because ?

A. Some people can’t count
B. Some people may not be permanent resident
C. Not all economic activity is legal
D. We can’t make value judgments to compare different people’s welfare