Profit is maximized at the rate of output where marginal revenue exceeds marginal cost by the greatest amount
Indicate whether the statement is true or false
false
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Which of the following best summarizes the essence of the Invisible Hand Theorem?
a. Competitive markets guarantee that any shortages or surpluses existing in an economy will be quickly eliminated. b. Of all the possible economic systems, competitive markets are the most philosophically compatible with democracy and freedom. c. Within competitive markets, people who selfishly pursue their own interests end up achieving a socially desirable outcome. d. The social gain created by competitive markets is second only to what a hypothetical benevolent dictator could achieve.
If $30 is paid for a share of stock and the earning per share is $3, how long will it take for the firm's earnings to add up to the purchase price?
a. 30 years b. 3 years c. 27 years d. 10 years e. 90 years
When existing firms lose customers and profits due to entry of a new competitor, a
a. predatory-pricing externality occurs. b. consumption externality occurs. c. business-stealing externality occurs. d. product-variety externality occurs.
Discuss the fractional reserve system and why it is important.
What will be an ideal response?