Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm A produces a monitor that Cassie buys but David does not, then the market outcome illustrates which of the following principles? (i) Free markets allocate
the supply of goods to the buyers who value them most highly, as measured by their willingness to pay. (ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost.
a. (i) only
b. (ii) only
c. both (i) and (ii)
d. neither (i) nor (ii)
b
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For the tenant in the post-bellum South, the advantage of sharecropping compared with renting for cash was that _____
a. the sharecropper's output was less dependent on weather b. the sharecropper realized all of the gains from extra effort c. sharecropping required more capital than renting d. under sharecropping the landlord absorbed part of the risk of a bad harvest
Marginal revenue equals the change in total revenue that is earned by selling one more unit of output
a. True b. False Indicate whether the statement is true or false
Why do economists insist on assuming that people behave rationally, when such an assumption is clearly false?
What will be an ideal response?
Which of the following is included in both M1 and M2?
a. savings deposits b. demand deposits c. small time deposits d. money market mutual funds