In a market system, how are the price signals established?
A) Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers.
B) Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines.
C) The forces underlying supply and demand interact to determine a market clearing price.
D) Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items.
Answer: C
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Monetary policy can
A) shift the short-run trade-off between inflation and unemployment if it affects expected inflation. B) shift the long-run trade-off between inflation and unemployment through changes in cyclical unemployment. C) shift both the short-run and long-run trade-offs between inflation and unemployment if changes in policy are credible. D) shift neither the short-run nor long-run Phillips curve trade-offs between inflation and unemployment.
Game theory is the study of which of the following?
a. The prisoner's dilemma b. The behavior of people engaged in recreational games c. The mutual interdependence of firms in oligopolistic industries d. The downward sloping demand curve faced by firms in an oligopoly e. The interaction between marginal and average revenue
The United States was among the first of the modern industrial nations to establish a central banking system
a. True b. False Indicate whether the statement is true or false
The scarcity problem
A. has been solved in all industrialized nations. B. persists only because countries have failed to achieve continuous full employment. C. has been eliminated in affluent societies such as the United States and Canada. D. persists because economic wants exceed available productive resources.