We can find the market demand for pears by:
a. adding up all the prices people are willing to pay for pears.
b. multiplying the number of people times the price of pears.
c. adding up the number of pears that producers are willing to sell.
d. multiplying the number of pears by the price of pears.
e. adding up all the individual demand curves for pears.
e
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Keynes argued that
I. Capitalism did not always lead to full employment. II. Nominal prices were more important than relative prices. A) I only B) II only C) Both I and II D) Neither I nor II
Suppose that there are two goods that a small island nation can produce – coconuts and breadfruit
If the inputs for both goods are perfectly interchangeable and there is never a rise or fall in opportunity cost explain what the production possibilities frontier should look like and why.
Assume that the reserve—deposit ratio is 0.4. The Federal Reserve carries out open-market operations, purchasing $1,000,000 worth of bonds from banks. This action increased the money supply by $1,750,000. What is the reserve—deposit ratio?
A) 0.2 B) 0.3 C) 0.4 D) 0.5
Explain why Adam Smith believed that competitive markets are a key component of achieving the gains from the invisible hand.
What will be an ideal response?