Which of the following is the primary source of high earnings in a market economy?
What will be an ideal response?
the ability to provide others with things that they value highly
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The Criminal Records Corporation is operating at its minimum efficient scale, selling 10,000 records per month via late-night cable TV advertising. It currently buys pressed records from Hole-in-the-Middle, Inc, which has a minimum efficient scale of 100,000 records per month. Which of the following should Criminal Records do?
a. Continue to buy 10,000 records from Hole-in-the-Middle, which can make the records more cheaply. b. Buy 100,000 records from Hole-in-the-Middle, so that company can reach its minimum efficient scale too. c. Buy Hole-in-the-Middle and use its facilities to manufacture the 10,000 records it needs. d. Buy Hole-in-the-Middle and stop operating as Criminal Records because Hole-in-the-Middle is the more efficient business. e. Buy Hole-in-the-Middle and stop operating as Criminal Records because Hole-in-the-Middle is the larger business.
When a commercial bank borrows from a Federal Reserve bank,
a. the commercial bank's reserves are reduced. b. the commercial bank's lending ability is increased. c. the money supply automatically declines. d. the net worth of the bank will decline, indicating that the bank is having financial difficulties.
The substitution effect is thought to dominate the behavior of low-wage workers.
Answer the following statement true (T) or false (F)
Refer to the accompanying figure, which shows the annual domestic supply and annual domestic demand for jeans in a small country.
Suppose this country initially does not trade with the rest of the world. If the world price of a pair of jeans is $40, and this country opens itself to trade, then the annual domestic production of jeans will:
A. increase from 20,000 to 28,000. B. fall from 20,000 to 4,000. C. fall from 28,000 to 4,000. D. increase from 4,000 to 28,000.