The economic function of profits and losses is to:
A. bring about a more equal distribution of income.
B. signal that resources should be reallocated.
C. eliminate small firms and reduce competition.
D. tell government which industries need to be subsidized.
Answer: B
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Indicate whether the statement is true or false
Suppose there are two groups of consumers that a monopolist can identify, one with relatively price-inelastic demand (perhaps because they have higher income and thus are not price sensitive) and one with relatively price-elastic demand. Which of the following forms of price discrimination would increase profit relative to charging each group the same price?
a. Charging the group with the higher price elasticity a higher price, and charging the group with the lower price elasticity a lower price. b. Charging the group with the higher price elasticity a lower price, and charging the group with the lower price elasticity a higher price. c. Charging the group with the higher price elasticity a price equal to marginal cost, and charging the group with the lower price elasticity a higher price. d. Charging a uniform price to both the groups of consumers.
Which of the following events opened the way for rapid and steady technological changes that underpinned modern economic growth?
A) The Agricultural Revolution B) The Industrial Revolution C) The American Civil War D) Demographic transition in the Western world
If the consumption of a good by one person reduces its consumption by others, then the good is
A. nonrivalrous in consumption. B. rivalrous in consumption. C. nonexcludable. D. excludable. E. b and d