John is an employee at a car manufacturer. Today he has come into work to find that production has stopped because the government has determined that the steel used in the cars will be better used in the manufacture of a new railway line. John doesn't mind, because although his wages are low, he gets paid whether there is any work for him to do or not. John MOST likely lives in a ________.
A) traditional economy
B) planned economy
C) market economy
D) mixed economy
E) capitalist economy
B) planned economy
Explanation: B) In a planned economy, government determines what to produce, controls the resources and means of production, and determines wages. Resources and products are distributed to the common group.
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If Dana spends all her income on ice cream and Mountain Dew and her marginal utility per dollar from ice cream is greater than her marginal utility per dollar from Mountain Dew, she should buy more ice cream and less Mountain Dew
Indicate whether the statement is true or false
If there is zero search cost, then in the presence of asymmetric information, competitive firms will
A) charge the monopoly price. B) charge the competitive price. C) charge zero price. D) shut down.
Suppose a sushi restaurant is making significant economic profit in the short run. In the long run
A) more people will open sushi restaurants, reducing the economic profit for each restaurant. B) high barriers to entry keep people from opening sushi restaurants. C) the government will require the sushi restaurant to sell part of its interests in the city. D) more people will open steak restaurants, increasing the economic profit for the sushi restaurant.
Which of the following is a distinction between perfectly competitive and monopolistic competition?
a. Perfectly competitive firms must compete with rival sellers; monopolistically competitive firms do not confront rival sellers. b. Monopolistically competitive firms can raise their price without losing sales; perfectly competitive firms must lower their price in order to sell more of their product. c. Perfectly competitive firms confront a perfectly elastic demand curve; monopolistically competitive firms face a downward-sloping demand curve. d. Perfectly competitive firms may make either economic profits or losses in the short run, but monopolistically competitive firms always earn an economic profit.