In the long run if there is a shortage in the market for a product, the guiding (allocation) function of price can be expected to cause
A) an increasing shift in the demand for the product.
B) a decreasing shift in the demand for the product.
C) an increasing shift in the supply of the product.
D) a decreasing shift in the supply of the product.
C
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According to the Law of Comparative Advantage,
A) production should be based on who can produce a product lowest opportunity cost. B) production should be based on who can produce more of a good. C) production should take into account strategic interests, such as national security. D) production should be for the people instead of for profit.
Financial capital flows could include
A) real estate purchases. B) construction of factories. C) sales of a business. D) the purchase of the physical assets and operations of a multinational corporation by another. E) currency market transactions.
The amount that must be paid to an individual to get them to invest in the industry is
A) a normal rate of return. B) the explicit costs. C) reinvestment. D) financial capital.
Which of the following is correct concerning stock market irrationality?
a. Bubbles could arise, in part, because the price that people pay for stock depends on what they think someone else will pay for it in the future. b. Economists almost all agree that the evidence for stock market irrationality is convincing and the departures from rational pricing are important. c. Some evidence for the existence of market irrationality is that informed and presumably rational managers of mutual funds generally beat the market. d. All of the above are correct.