How does a free-market system address the output selection task?
A free-market system decides what should be produced via the "law" of supply and demand. Where there is a shortage, the market mechanism pushes the price upward, thereby encouraging more production and less consumption of the commodity that is in short supply. Where a surplus arises, the same mechanism works in reverse: The price falls, discouraging production and stimulating consumption. Under laissez-faire, the allocation of society's resources among different products depends on consumer preferences and the production costs of the goods demanded. Prices vary so as to bring the quantity of each commodity produced into line with the quantity demanded.
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Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?
A) 14 B) 7 C) 4 D) 30
If men, on average, earn 20 percent more than women in a particular occupation,
a. this is clear evidence of discrimination b. some of this differential could be due to differences in human capital c. most but not all of the differential is due to discrimination d. comparable worth laws must not be in effect e. men must have higher skills levels than women
In a free market, a given unit of an input will be used by the firm that
a. earns the largest addition to total profit from the use of that unit of input. b. has the lowest marginal cost of producing another unit of output. c. sells its output for the highest price. d. earns the largest total profit.
Use the table below to answer the following question. Units of Total Fixed Total Variable Output Cost (dollars) Cost (dollars) 1 1,000 1,200 2 1,000 2,400 3 1,000 3,600 4 1,000 5,000 5 1,000 6,600 What is the average total cost at an output level of four units?
A. $1,200. B. $1,400. C. $1,500. D. $2,000.