Define free markets. Does a perfectly competitive market qualify as a free market?
What will be an ideal response?
A free market can be defined as a market structure where all exchanges are voluntary. There is very little government control or coercion in the market and the government does not tell market participants what to do. In a perfectly competitive market, the equilibrium price and quantity are determined through the forces of demand and supply, and without any government intervention. Hence, perfectly competitive markets qualify as free markets.
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Seth is a competitive body builder. He says he has to have his 12-oz package of protein powder to "feed his muscles" every day. On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?
A) It is perfectly inelastic. B) The price elasticity coefficient is 1. C) It is elastic. D) It is perfectly elastic.
If the price of a haircut (a normal good) increases, other things constant, the
a. demand for haircuts increases b. demand for haircuts decreases c. quantity demanded of haircuts decreases d. quantity demanded of haircuts increases e. demand for haircuts, or quantity demanded of haircuts decreases; they are the same thing
An open market sale of U.S. Treasury securities by the Fed will cause the Banking System's balance sheet to show:
A. no net change in assets or liabilities, only a change in the composition of assets with securities increasing and reserves decreasing. B. only an increase in liabilities. C. no net change in assets or liabilities, only a change in the composition of assets with securities decreasing and reserves increasing. D. only a decrease in assets.
Nations with single payer systems typically have
A. serious inequality in the access to basic care. B. lower tax rates than exist in the U.S. C. lower life expectancies than in the U.S. D. worse access to high-tech medical solutions than in the U.S.