In a true market economy, how many people decide what will be produced?
a. a small handful of government officials
b. one overall leader
c. millions of consumers and producers
d. a few thousand corporate managers
c. millions of consumers and producers
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If the government finances an increase in government purchases with an increase in taxes, which of the following would you expect to see?
A) a decrease in the interest rate B) a decrease in aggregate demand C) an increase in the exchange rate D) an increase in net exports
The basic problem that a market system handles is achieving cooperation and plan coordination among people despite
What will be an ideal response?
Does this production function, q = 10L0.5K0.3, experience increasing, decreasing or constant returns to scale?
A) Decreasing because a 100% increase in inputs increases outputs by 80%. B) Increasing because an 80% increase in inputs increases outputs by 100%. C) Decreasing because 0.5 + 0.3 < 1. D) A and C.
If a farmer produces 1000 bushels of corn using ten acres of land and one tractor and is able to produce 2000 bushels of corn using twenty acres of land and one tractor, the farmer has
A) increasing returns to scale. B) constant returns to scale. C) decreasing returns to scale. D) no returns to scale.