In order to be successful in a market economy, entrepreneurs must
a. combine resources in a manner that increases their value.
b. produce a good that consumers value less than the resources used to produce it.
c. use only personal financial capital so they can avoid interest payments on borrowed funds.
d. produce anything that consumers value, regardless of cost.
a. combine resources in a manner that increases their value.
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Suppose Robert deposits $100 of cash into a checking account at a commercial bank. His actions will
A) decrease M1 by $10,000. B) increase M1 by $10,000. C) produce no change in M1, but M1 will decrease in the future because the bank has excess reserves. D) produce no change in M1, but M1 will increase because the bank has excess reserves.
If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would
A) also double. B) remain constant. C) decrease by 50%. D) be cut in half.
When the price of a product rises, the increase in quantity supplied will generally be greater in the long run than the short run because
a. producers maximize short-run, not long-run, profits. b. over time, new firms will enter the industry and old firms will expand their operations in response to the price increase. c. consumers are less resistant to higher prices in the long run than in the short run because they have fewer options in the long run. d. consumer income will expand in the long run, causing resource prices to rise, which will induce producers to increase output.
______ is the creation of capital goods to augment future production.
a. Double counting b. Depreciation c. Consumption d. Investment