Which of the following is true?
a. In a competitive capital market, private investors have a strong incentive to evaluate projects carefully and allocate their funds toward those projects expected to yield the highest rates of return.
b. In a competitive environment, profitable investment projects will tend to increase the wealth of the nation.
c. When investment funds are allocated by governments (rather than capital markets), political clout rather than the expected rate of return will generally determine which projects are undertaken.
d. All of the above are correct.
D
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Assuming we are considering a normal good, the calculated price elasticity of demand is:
A) always positive. B) always negative. C) positive if demand is elastic and negative if demand is inelastic. D) positive if demand is inelastic and negative if demand is elastic.
In the last three decades of the 19th century, the long-run supply track of farm prices
(a) indicates a decline in farm prices due to a slowly increasing demand and a more rapidly increasing supply. (b) indicates a decline in farm prices due to a slowly increasing supply and a more rapidly increasing demand. (c) indicates an increase in farm prices due to a slowly increasing supply and a more rapidly increasing demand. (d) indicates relatively constant prices due to the fact that supply and demand were both increasing at about the same rate.
An economic benefit of contracts is that they
a. protect property rights b. encourage involuntary exchanges c. reduce the number of possible Pareto improvements d. encourage market concentration e. encourage specialization