Which of the following most accurately states the economic significance of exchange?
a. Physical goods have value because they exist; exchange can neither increase nor decrease their value.
b. Production of physical goods creates value; exchange merely redistributes this value.
c. Exchange creates value by moving goods from parties who value them less to parties who value them more.
d. Exchange reduces value since it consumes resources without adding to the physical supply of goods.
C
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What does the term "undercutting" refer to?
What will be an ideal response?
Externalities occur
A) only when a person acts out of greed. B) only when a person acts out of selfish interest. C) only when a person is concerned with personal profit. D) only when the decision maker does not take into account all the benefits or costs from an action.
Demand elasticity equals quantity times price.
Answer the following statement true (T) or false (F)
An efficient point of production is
A) a point on the production possibilities curve. B) a point inside the production possibilities curve. C) the point where scarcity no longer exists. D) the point where we are currently producing.