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1. Rent Seeking is the process whereby a firm or interest group: a. lobbies a government for help...

Question:

1. Rent Seeking is the process whereby a firm or interest group:

a. lobbies a government for help in avoiding competition from other firms

b. asks a business for help in paying rent on some of its manufacturing facilities

c. persuades consumers to help pay for unusually rents in a certain location

d. sells rather rents land to business who would rather own than rent a piece of land

e. all of the above

2. Which of the following industries employs price discrimination?

a. agriculture

b. alcoholic beverage

c. retail clothing

d. public institution of higher education

3. A natural monopoly occurs when:

a. long-run average costs decline continuously through the range of demand

b. a firm owns or controls some resource essential to production

c. long-run average costs rise continuously as output is increased

d. economies of scale are obtained at relatively low levels of output

Rent Seeking:

Rent seeking is a concept related to the field of public choice and economics as well. It involves increasing one's share of total wealth through manipulation.

Answer and Explanation:

1. Rent Seeking is the process whereby a firm or interest group:

  • a. lobbies a government for help in avoiding competition from other firms

Rent seeking is the practice of manipulating public policies or strategies in order to increase profit, by a group. Through manipulation of policies, one's share of wealth is increased without increasing the total income.

2. The following industry employs price discrimination -

  • d. public institution of higher education

Price discrimination is the practice of charging different prices for the same good, to different consumers. Agricultural goods are homogeneous and are sold at same price to all. Same is the case with other industries mentioned except the higher education industry. In higher education industry, the tuition fees is charged differently as some students get chance to pay discounted fee through means of scholarship, financial aid etc.

3. A natural monopoly occurs when:

  • b. a firm owns or controls some resource essential to production

Natural monopoly occurs when there are high entry barriers because of high start up cost of doing the business. It often occurs as a scenario when a firm owns or controls some important source of resources, like a water body in a remote area, that is required to produce the good.


Learn more about this topic:

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Natural Monopoly in Economics: Definition & Examples

from Intro to Business: Help and Review

Chapter 3 / Lesson 13
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