In the absence of externalities, what can be said about the invisible hand of the marketplace?
a) It induces people to act in a matter inconsistent with self-interest.
b) It leads to a market outcome that maximizes total benefit to society.
c) It increases the transaction costs of contracting between parties in an exchange.
d) It is unable to resolve inherent inefficiencies in market system.
Ans: b) It leads to a market outcome that maximizes total benefit to society.
You might also like to view...
If average labor productivity in two countries is the same, average living standards will be lower in the country with:
A. the smaller population. B. the larger population. C. the lower share of population employed. D. the higher share of population employed
Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that manufactures peanut butter, which sells it for $45 . Which of the following is true?
a. Total value added is $65 b. The value of final sales is $65. c. The value of final sales is $25. d. Total value added is $25. e. Total value added is $45.
When interest rates in the U.S. increase, we can expect NCO to:
A. decrease, because capital inflow is increasing. B. increase, because capital inflow is increasing. C. decrease, because capital outflow is increasing. D. increase, because capital outflow is increasing.
In recent years, the United States has had large:
A. current account surpluses. B. current account deficits. C. balance of trade surpluses. D. balance of payments surpluses.