"Scarcity implies that some way of rationing goods must be found." Explain what this statement means. How is this rationing done?
What will be an ideal response?
Scarcity means that there are not enough goods and services to satisfy unlimited human wants. When more people want something than can have it, some way must be found to determine who gets the available units. This process is rationing. Rationing can be done by using prices to ration a good to those most willing and able to pay the highest price. First-come-first-served rations by queues, lotteries ration on the basis of chance, discrimination rations on the basis of racial, ethnic, or gender preferences, and so on.
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The U.S. economy has seen a faster increase in productivity since the mid-1990s as compared to the economies of many Western European countries. Which of the following explains this?
A) The United States has a higher rate of job mobility than do many Western European countries. B) U.S. unions impose stricter work rules as compared to unions in Western European countries. C) U.S. government regulations impose stricter work rules as compared to government regulations in Western Europe. D) U.S. workers can obtain unemployment insurance for a longer period of time as compared to workers in most Western European countries.
Which of the following is true in the circular flow diagram?
a. Household savings flow into the factor market, and investment flows to foreign economies. b. Household savings flow into financial markets, and investment flows back to households. c. Household savings flow into financial markets, and investment flows into product markets. d. Household savings flow into foreign economies, and investment flows into financial markets.
Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers is
A) price discrimination. B) cost-plus pricing. C) price differentiation. D) product differentiation.
The theory of regulation developed to deal with "natural monopolies" is called:
A. Legal cartel theory B. Public interest theory C. Potential competition theory D. Social regulation theory