Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
a. There is no such thing as a free lunch.
b. People buy more when prices are low than when prices are high.
c. No matter how much people earn, they tend to spend more than they earn.
d. Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
d
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If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign), then a 50 percent increase in the price of smart watches will lead to
A. the sale of 200 additional smart watches. B. the sale of 125 percent fewer smart watches than before. C. the sale of 70 percent fewer smart watches than before. D. the sale of 25 percent fewer smart watches than before.
The tax on Social Security is statutorily paid _____
a. by individuals b. by employers c. two-thirds by individuals and one-third by employers d. half by individuals and half by employers
Electric power utility companies use various fuel sources (e.g., coal, natural gas, nuclear) to generate electricity for their customers
What happens to the demand for natural gas used to generate electricity as we move from a short-run planning horizon to a long-run planning horizon? Why? A) Demand becomes more inelastic over time because the other fuel sources become more scarce, so there are fewer options available for electric power utilities in the long run. B) Demand becomes more inelastic over time because all of the power generation plants tend to choose the same technology, which makes the industry less responsive to prices in the long run. C) Demand becomes more elastic over time because the electric plant's technology becomes obsolete, and the power company has less flexibility to adjust to changes. D) Demand becomes more elastic over time because the power companies have more options available and can adopt new generating technologies or substitutes for natural gas over the long run.
Which of the following is a characteristic of capitalism?
A. government ownership of all capital B. government decision-making is preferred to decentralized decision-making C. market determination of prices and quantity D. equality of income