Consider the following economic agents:
a. the government
b. consumers
c. producers
Who, in a market economy, decides what goods and services will be produced with the scarce resources available in that economy?
A) producers
B) consumers and producers
C) the government, consumers, and producers
D) consumers
E) the government
B
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Refer to Figure 5-1. The efficient equilibrium price is
A) $60. B) $50. C) $40. D) < $40.
By what mechanism does the economy always return to full employment after a demand shock in the short run?
a. Wages automatically adjust themselves. b. The interest rate automatically adjusts itself. c. Prices automatically adjust themselves. d. Taxes automatically adjust themselves. e. Rents automatically adjust themselves.
Points that lie outside the production possibilities curve are ________, and points that lie inside the production possibilities curve are ________.
A. attainable; unattainable B. inefficient; efficient C. efficient; inefficient D. unattainable; attainable
Suppose at the current level of labor used, MRP = $20 and MFC = $25. To maximize profits, the firm should
A. maintain the current level of labor. B. reduce the level of labor. C. expand production. D. hire more labor.