Marginal cost pricing results in the most desirable mix of goods and services from the consumer's standpoint because
A. Firms are forced to produce at the most technically efficient output level.
B. The prices consumers pay are a reflection of the value of the goods and services given up.
C. Economic profits are zero.
D. Prices are forced down to the lowest possible level.
Answer: B
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If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent, then supply is
A) elastic and the elasticity of supply equals 1.5. B) inelastic and the elasticity of supply equals 1.5. C) elastic and the elasticity of supply equals 0.66. D) inelastic and the elasticity of supply equals 0.66. E) either elastic or inelastic, but more information about the elasticity of demand is needed to determine which.
The economic way of thinking assumes people, including Mother Teresa, Jack the Ripper, Henry VIII, and Hilary Rodham Clinton, act on the basis of
A) greed. B) altruism. C) terror. D) the projects they are interested in.
Some people like blue jeans that fit tightly, and some prefer blue jeans with some give. These preferences for small differences in the same kind of product create opportunities for _______________ among the companies that produce them.
a. monopolies b. monopolistic competition c. perfect competition d. price fixing
Suppose tax policies are changed to encourage saving. Explain how the income effect and substitution effect influence the amount saved