Profits and losses play an important role in helping
a. to signal to government which businesses are suffering losses so that they can be subsidized.
b. consumers decide which products they value the most by looking at each firm's profit.
c. direct businesses toward productive projects and away from ones that are unproductive.
d. ensure that the total profits in the economy exactly equal the total losses.
c. direct businesses toward productive projects and away from ones that are unproductive.
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According to the foreign trade effect, when the U.S. price level decreases, U.S. consumers are likely to buy:
A. More American-made products. B. Different American-made products. C. More foreign-made products. D. Less of all products, both American made and foreign made.
The free-rider problem can occur when
A. government deregulates the public transit system. B. welfare programs are not regulated well enough. C. public goods are provided to an individual who receives the benefit but does not pay for it. D. the government taxes a good or service.
The Lorenz curve is a geometric representation of
A. the difference between pre-tax and post-tax income. B. the profile of earnings for a "typical" family over time. C. the distribution of income. D. the standard of living experienced by the poor in a country.
There are only two firms in an industry with demand curves q1 = 30 - P and q2 = 30 - P. Both have no fixed costs and each has a marginal cost of 10 per unit produced. If they behave as profit-maximizing price takers, each produces 20 units and sells them at a price of 10 so that each firm makes zero economic profits. If they formed a cartel, the profit-maximizing price is
A) 10. B) 15. C) 20. D) 25.