How does the market mechanism distribute income?
The market mechanism distributes income through its payments to the factors of production. Everyone owns some potentially usable factors of production. Many people have only their own labor; but some people also have funds that they can lend, land that the owner can rent, or natural resources that they can sell at prices determined by supply and demand. So the distribution of income in a market economy is determined by the prices of the factors of production and by the amounts that are employed.
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Pollution is an example of a negative externality
a. True b. False Indicate whether the statement is true or false
Investment is a flow of resources into the production of new capital.
Answer the following statement true (T) or false (F)
George Gnat subscribes to a monthly pest control service for his home
Last week the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips. How is the market for pest control services affected by this? A) There is a decrease in the demand for pest control services. B) There is a decrease in the supply of pest control services. C) There is a decrease in the quantity of pest control services supplied. D) There is an increase in the supply of pest control services.
Repetition of a game
A) yields the same outcome, over and over. B) can result in behavior that is different from what it would be if the game were played only once. C) is not possible. D) makes cooperative games into non-cooperative games. E) is possible only if the payoffs in the matrix change.