"Scarcity implies that some way of rationing goods must be found." Explain what this statement means. How is this rationing done?
What will be an ideal response?
Scarcity means that there are not enough goods and services to satisfy unlimited human wants. When more people want something than can have it, some way must be found to determine who gets the available units. This process is rationing. Rationing can be done by using prices to ration a good to those most willing and able to pay the highest price. First-come-first-served rations by queues, lotteries ration on the basis of chance, discrimination rations on the basis of racial, ethnic, or gender preferences, and so on.
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In a free market economy, the decisions of buyers and sellers are:
A. coordinated by the government. B. random. C. motivated by custom and tradition. D. guided by prices.
Although originally its articulation may have been a mistake, the rule of reason has become a useful principle for interpreting antitrust law
Indicate whether the statement is true or false
As a means of gaining monopoly power, holding companies were preferable to gentlemen's agreements and pooling because
a. holding companies did not have an adverse impact on employment. b. holding companies were able to reduce competition from imported goods. c. holding companies were legal in most states. d. holding companies were not subject to corporate profits taxes.
Consider a regulated natural monopoly. If the regulatory commission wants to establish a fair-return price, then it should set a price ceiling where the demand curve crosses the monopoly's long-run:
a. marginal revenue curve. b. average revenue curve. c. marginal cost curve. d. average cost curve.