Answer the following questions true (T) or false (F)
1. In the circular flow model, households demand resources such as labor services in the product market.
2. In economics, the term "free market" refers to a market where no sales tax is imposed on products sold.
3. In a free market there are virtually no restrictions, or at best few restrictions, on how a good or service can be produced or sold.
1. FALSE
2. FALSE
3. TRUE
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"Price discrimination allows a monopolist to increase his or her economic profits by capturing part of the consumer surplus and turning it into economic profit
" Is the previous statement correct or incorrect? If the statement is correct, why is it important in understanding firms' behaviors? If it is incorrect, why is it incorrect?
A perfectly competitive firm need never consider
a. price because it cannot control price b. its fixed cost because it cannot shut down c. its market share because advertising keeps it competitive d. the effect of its own production on price e. barriers to entry because the barriers never change
Milton Friedman's macroeconomic theory and political philosophy have the relationship one would expect. He is a
A. Keynesian and a political liberal. B. new classical macroeconomist and a political liberal. C. monetarist and a political conservative. D. supply-sider and a political conservative.
Transaction costs refer to:
A. variable costs of labor. B. fixed costs of capital. C. economies of scale. D. costs of exchange unrelated to production costs.