Profits and losses are TRUE signals because they

A. cannot be misinterpreted by entrepreneurs.
B. convey information about where to place resources and reward people who act on the information.
C. convey information about true long-run profits.
D. reward people who make profits with even more profits and punish those who make losses with even more losses.


Answer: B

Economics

You might also like to view...

One concern about globalization is that while it may be benefiting ____________ workers in the United States, it may also impose costs on ____________ workers.

a. low-skilled, low-wage; high-skilled, high-wage b. high-skilled, high-wage; low-skilled, low-wage c. low-skilled, low-wage; semi-skilled, medium-wage d. semi-skilled, medium-wage; high-skilled, high-wage

Economics

If there is a decrease in the price level,

a. there will be a rightward movement along a stationary money demand curve b. there will be a leftward movement along a stationary money demand curve c. the demand curve for money will shift rightward d. the demand curve for money will shift leftward e. there will be no movement of the demand curve for money and no movement along it

Economics

If the economy is in a deep recession, a modest increase in aggregate demand is likely to cause _____ in prices and _______ in output level.

a) an increase; an increase b) an increase; little or no change c) a decrease; an increase d) little or no change; an increase e) little or no change; little or no increase

Economics

________ is maximized in a competitive market when marginal benefit equals marginal cost

A) Deadweight loss B) Marginal profit C) Economic surplus D) Selling price

Economics