The economic system that answers the What, How and For Whom questions using prices determined by the interaction of supply and demand is a:
a. market economy. b. command economy
c. soviet economy. d. traditional economy.
a
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Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic. As a result, a 7 percent increase in the price charged by the owner of this stand leads to
A) zero peaches sold by this stand. B) no change in the quantity demanded at this stand. C) a 7 percent decrease in the quantity demanded at this stand. D) a 7 percent decrease in demand at this stand. E) a virtually infinite increase in the quantity demanded at this stand.
Under perfect competition, if a firm is suffering a loss,
a. MR exceeds ATC. b. AR equals AVC. c. AR equals ATC. d. AR is less than ATC.
Which of the following statements about checking deposits is true?
A) It is a liability for both households and banks. B) It is an asset for both households and banks. C) It is an asset for households but a liability for a bank. D) It is a liability for households but an asset for a bank.
Two goods are substitutes when
A) an increase in the price of one reduces the demand for the other. B) an increase in the price of one raises the demand for the other. C) the two goods are used together. D) the two goods have the same price.