Why has the free-market system produced the most rapid rates of growth of any economic system?
What will be an ideal response?
The features of competitive markets put pressure on businesses to do everything they can to contribute to growth. Innovation in particular is used by firms to compete with one another. Innovation has been perhaps the major factor in the rapid rate of output growth.
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In the model of monopolistic competition, trade costs between countries cause
A) marginal costs of exported goods to exceed the marginal costs of goods sold domestically. B) marginal costs of goods sold domestically to exceed the marginal costs of exported goods. C) all firms that can earn a profit on domestic sales to export their goods at lower prices. D) all firms that can earn a profit on domestic sales to export their goods at higher prices. E) countries to negotiate the elimination of trade costs by mutual subsidization of trade.
For which of the following pairs of goods would most people likely have convex indifference curves?
A) nickels and dimes B) left shoes and right shoes C) movie tickets and concert tickets D) None of the above.
The empirical specification TVC = aQ + bQ2 + cQ3 can be used to estimate
A. a ?-shaped TVC curve. B. short-run cubic cost function. C. a short-run cubic production function. D. both b and c E. none of the above
Imports are a leakage in the sense that
A. the international financial system is unstable. B. consumers buy foreign output of goods and services. C. foreigners earn less than U.S. workers. D. a trade deficit increases aggregate demand.