Most of the world's economies are mixed economies because _________
a. a cartel of powerful transnational firms demands it.
b. the market system of allocation is always best.
c. the command system of allocation is always best.
d. government intervention in an overall market system exists because markets fail when there is market power, a great deal of inequality, pollution externalities, or public goods.
d
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Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is 10 coffee per 1 unit cream) are invited to a weekend long event (during which they can easily consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is given 80 units of coffee. The post trading result (one in which any trade that makes both parties better off than their initial
allocation) will guarantee each person a. nothing b. at least 1 cup of properly made coffee. c. at least 2 cups of properly made coffee. d. exactly 4 cups of properly made coffee.
Banks create money in the economy by:
A. loaning out part of each deposit, which will be redeposited by someone else. B. charging higher interest on loans than savings. C. charging higher interest on savings than loans. D. loaning out all of their deposits to borrowers.
A natural monopoly is a monopoly that arises from:
A. having exclusive control over the natural resources used to produce a good. B. having an exclusive right to operate in a national park. C. a firm's natural desire to maximize its profit. D. economies of scale.
More and more devices are being introduced into the market that perform tasks similar to that of PCs, such as tablets and smartphones. At the same time, the price of computer chips to make high-end PCs continues to fall. What is the effect of the events on equilibrium price and quantity of high-end PCs?
A. Price falls continuously as does quantity sold. B. Price falls continuously while quantity falls initially but then rises, recouping earlier losses. C. Price rises then falls while quantity sold falls continuously. D. Price falls continuously and quantity rises continuously.