Which of the following represents key strengths of the market economy as a system of allocation?
a. Goods and services are allocated based on willingness and ability to pay,rather than based on need
b. Producers have strong incentives to innovate because successful innovatorsare rewarded with higher profit.
c. Since price is freely set based on supply and demand, shortages and surplusesare minimized.
d. All of the answers above are correct.
d
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To fight recession, the government may
a. decrease aggregate demand, which will also lead to lower unemployment rates. b. increase aggregate demand, which will also lead to higher price levels. c. increase aggregate demand, which will also lead to lower price levels. d. decrease aggregate demand, which will also lead to higher unemployment rates.
In the short-run production function, the following variables must be endogenous:
a. technology. b. labor input. c. capital input. d. b and c. e. none of the above.
The Pricing Chips suggests that consumers choose between substitutes based on
A) comparative advantages. B) absolute prices. C) absolute opportunity costs. D) relative prices.
Which tax is fixed at 15.3 percent of wages?
a. FICA b. federal income c. property d. Medicaid