Firms are motivated to minimize production costs because:
A. it is the most environmentally friendly way to produce goods.
B. least-cost production techniques use the smallest total quantity of resources.
C. competitive pressures in the market will drive out higher-cost producers.
D. the government provides tax credits and subsidies to low-cost producers.
Answer: C
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According to the theory of liquidity preference, an increase in the price level causes the
a. interest rate and investment to rise. b. interest rate and investment to fall. c. interest rate to rise and investment to fall. d. interest rate to fall and investment to rise.
Aluminum Aces dumps wastewater into a creek they have owned for decades. The new neighbor, Ms. Franklin, has tried to grow bamboo along the creek where it enters her property, but the wastewater kills about $1,000 worth of her bamboo each year. She offers Aluminum Aces $600 per year to add a new filter, which costs $400, to their system so wastewater will no longer kill her bamboo. Which of the following is true of this situation and necessary for it to fit the Coase theorem?
a. Neither party is worse off than before. b. Property rights are not defined. c. A positive externality is internalized. d. Transaction costs are high.
Which of the following will cause a reduction in the amount of money individuals wish to hold?
A. an increase in the price level B. an increase in income C. an increase in the interest rate D. all of these
The price system is based on the law of __________________.
Fill in the blank(s) with the appropriate word(s).