Which of the following is necessary for the invisible hand of market prices to work properly?
a. buyers and sellers who generally tend to disregard their own self-interest
b. democratic political procedures and highly regulated markets
c. price controls that restrict the movement of market prices
d. competition and property rights that are well-defined and enforced
D
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If macaroni and cheese is an inferior good, an increase in income will
A) not affect the demand for macaroni and cheese. B) decrease the demand for macaroni and cheese. C) increase the demand for macaroni and cheese. D) create no income effect.
In a world of perfect certainty, sharecropping would be less efficient than a farm owner working his own farm because
(a) sharecroppers receive only half of their marginal product. (b) paying a worker a wage gives him or her an incentive to shirk. (c) sharecroppers are exploited by landlords. (d) renting farmland concentrates risk on the renters. (e) all of the above.
Which of the following is a feature of a contestable market?
A. There is a single firm in the market serving many consumers. B. There is a single firm in the market serving many consumers and the market price is equal to marginal cost. C. The market price is equal to marginal cost. D. There are several firms in the market serving many consumers.
Suppose that a market for a product is in equilibrium at a price of $5 per unit. At any price above $5 per unit:
A. there will be an excess demand for the product. B. there will be an excess supply of the product. C. the quantity supplied of the product will be less than the quantity demanded of that product. D. there will be a shortage of that product.