Which of the following is true of profits and losses?
a. Profits direct entrepreneurs toward production of goods that are highly valued relative to their cost, while losses direct them away from wealth-reducing activities.
b. Profits indicate that the firm is charging prices that are too high, while losses indicate that the firm needs to raise its prices.
c. Profits indicate that the consumer is getting a bad deal, while losses indicate that the consumer values the product highly relative to its cost.
d. Profits indicate that the suppliers of resources are underpaid, while losses indicate they are overpaid.
A
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The real interest rate is given by:
A) the nominal interest rate adjusted for inflation. B) the nominal interest rate adjusted for changes in exchange rate. C) the nominal interest rate adjusted for income changes. D) the nominal interest rate adjusted for tax rates.
Natural unemployment equals the sum of
A) cyclical and frictional unemployment. B) cyclical, business, and structural unemployment. C) frictional and structural unemployment. D) business and cyclical unemployment. E) cyclical and structural unemployment.
Higher prices can discourage use/consumption, which in turn may better allocate scarce resources.
Answer the following statement true (T) or false (F)
Personal consumption expenditures:
a. represent close to two-thirds of GDP. b. are equal to personal income minus individual taxes. c. include durable good purchases but not nondurable good purchases. d. do not include any intangible consumption items. e. include all goods and services bought by the government.