Which of the following is a problem with the price system that can lead to a breakdown in the coordination of economic activity?
A. The price system works silently in the background.
B. Prices can be slow to adjust.
C. Prices may be flexible.
D. All of these
Answer: B
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Which of these is true of the mercantilism policy? a. It accepts gold as a medium of exchange
b. It encourages free movement of labor and capital resources between nations. c. It emphasizes government control over the production of important goods and services. d. It emphasizes the importance of trade restrictions in achieving economic growth. e. It believes that a nation's economic vitality depends on its unemployment level.
Which one of the following statements most accurately indicates the basic motivation for behavior?
a. Individuals are motivated primarily by selfish desires; thus, personal costs and benefits influence their actions. b. Individuals are motivated primarily by humanitarian concerns; therefore, personal costs and benefits exert little influence on most of their actions. c. Individuals are motivated by a variety of forces; however, changes in personal benefits and costs influence the choices of both selfish and humanitarian individuals. d. Individuals are motivated by a variety of forces; however, changes in personal benefits and costs affect behavior only when individuals are motivated by selfishness.
In the following figure, AB is the production-possibility curve of Canada. The line PQ shows the price ratio of one bushel of wheat/bale of cotton. The international price ratio is 0.25 bushels of wheat/bale of cotton as shown by the line RS. I1 and I2 are two of the community indifference curves of Canada. Which of the following can be inferred from this figure?
A. Canada has a comparative advantage in the production of wheat. B. Canada has an absolute advantage in the production of both goods. C. Canada has an absolute disadvantage in the production of both goods. D. Canada has a comparative advantage in the production of cotton.
The price elasticity number for necessities will be greater than 1.
Answer the following statement true (T) or false (F)