When competition is present and private ownership rights are clearly defined and securely enforced by the legal system, business firms will have a strong incentive to
What will be an ideal response?
innovate and develop better products and lower cost production methods.
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If the interest rate increases, lifetime wealth (we)
A) increases. B) stays constant. C) decreases. D) changes in an ambiguous way.
An extreme case in which a percentage change in price, no matter how large, results in zero change in quantity is called:
a. perfect inelasticity. b. perfect elasticity. c. strong elasticity. d. weak elasticity.
Which of the following are both correct?
a. Data show no correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the income effect. b. Data show no correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the substitution effect. c. Data show a positive correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the income effect. d. Data show a positive correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the substitution effect.
Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?
A. LRAS1 B. LRAS1 C. LRAS3 D. Both LRAS1 and LRAS3