Answer the following questions true (T) or false (F)
1. In a free market there are virtually no restrictions, or at best few restrictions, on how factors of production can be employed.
2. Crude oil is not an example of a factor of production, but when crude oil is processed into gasoline, it is a factor of production.
3. Each person goes about her daily business seeking to maximize her own self interests. In doing so, she contributes to the welfare of society at large. This is the idea underlying Adam Smith's "invisible hand."
1. TRUE
2. FALSE
3. TRUE
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Refer to Figure 7-23. The equilibrium price is
a. P1
b. P2
c. P3
d. P4
The IMF policies that accompany most IMF loans are typically:
A. contractionary in the long run. B. procyclical in the long run. C. contractionary in the short run. D. expansionary in the short run.
You may be unwilling to buy a used car because you suspect the last owner found out the car was a lemon. You may treat a car you rented with a little less care than you would use on your own car
a. Both examples primarily illustrate adverse selection. b. Both examples primarily illustrate moral hazard. c. The first example primarily illustrates adverse selection; the second primarily illustrates moral hazard. d. The first example primarily illustrates moral hazard; the second primarily illustrates adverse selection.
Interactive marketing is
A. advertising targeted at specific consumers. B. advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio. C. advertising intended to reach as many consumers as possible. D. advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders.