In a free market economy, the market clearing (equilibrium) price in the above table would adjust to
A) $1.
B) $3.
C) $4.
D) $5.
B
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In the labor market, adjustments to changes in supply and demand
A) usually occur instantly. B) usually take time to occur. C) do not apply, since the labor market does not respond to supply and demand forces. D) do not apply, since wages in the labor market always go up.
The Scarcity Principle applies to:
A. only market decisions, e.g., buying a car. B. all decisions. C. only non-market decisions, e.g., watching a sunset. D. only the poor.
An economic naturalist is someone who:
A. applies economic insights to understand everyday life. B. studies the process of natural selection in a cost-benefit framework. C. has an innate talent for using economic concepts. D. uses economic arguments to protect the environment.
Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Amy should specialize in producing
A. cars. B. cheese. C. both cheese and cars. D. neither cheese nor cars.