What is the economic variable that guides the invisible hand?
What will be an ideal response?
The invisible hand is guided by the market price. Market prices act as the most important piece of information, leading the right buyers to buy and the right sellers to sell; no more, no less. It ensures that self-interest and social interest are perfectly aligned. It also allows economic agents to make optimal decisions.
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A significant amount of positive consumer surplus is the reason why sometimes a shopper regrets having bought a particular item
Indicate whether the statement is true or false.
What would be expected to happen to the size of the underground economy if:
a. businesses tax rates decreased. b. government regulations on businesses increased dramatically. c. the sale and use of marijuana was legalized in all 50 states.
Suppose a multi-product monopolist sells two complementary goods, A and B. Annual market demand for good A is QdA = 600 - 25PA - 12PB. Each time a consumer buys A, his demand for B is QdB = 4 - 0.4PB. The marginal cost of good A is a constant $4, and the marginal cost of good B is a constant $0.50. Suppose the price of good B is $5. If the monopolist ignores the effect of additional sales of A on the sales of good B, how many units of good A will it produce?
A. 665 B. 440 C. 332.5 D. 220
Suppose the price of eggs decreases from $2 per egg to $1.50 per egg. Due to this decrease in price, the ____ will increase
a. producer surplus b. consumer surplus c. opportunity cost of producing an egg d. social marginal cost