Which of the following statements about markets is most accurate?
a. Markets are usually a good way to organize economic activity.
b. Markets are usually inferior to central planning as a way to organize economic activity.
c. Markets fail and are therefore not an acceptable way to organize economic activity.
d. Markets are a good way to organize economic activity in developed nations, but not in less developed nations.
a
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Self interest
A) reflects choices that are best for the individual who makes them. B) reflects choices that are best for society as a whole. C) occurs only when wants exceed available resources. D) cannot be used to determine how goods are produced. E) has nothing to do with determining what goods are produced.
Public choice theory emphasizes the role of self-interest in public decision-making.
Answer the following statement true (T) or false (F)
A firm uses an efficiency wage scheme to deter workers from shirking, which is detected 10% of the times. Suppose a risk-neutral worker. The industry ongoing wage is $3,000. The efficiency wage paid by this firm is $8,000. What is this worker's reservation wage?
A) $400 B) $500 C) $1,000 D) $1,500
If the social costs of an economic activity are $120 and the private costs are $75, then the external costs of the activity are ________, and market failure ________.
A. $45; occurs B. $195; occurs C. $195; does not occur D. $45; does not occur