A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect
a. the value of a good to society, but not the cost of making it.
b. the cost of making a good to society, but not its value.
c. both the value of a good to society and the cost of making it.
d. neither the value of a good to society nor the cost of making it.
c
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Being a very careful apartment renter (always locking the door, making sure the stove and iron are off when leaving, etc.) is an example of ________.
A) moral hazard B) certification C) a hidden characteristic D) screening
The patented outcome of a research project financed by a private organization is a private good.
Answer the following statement true (T) or false (F)
Economies where goods and services are traded directly for other goods and services are called ________ economies.
A) trade B) barter C) direct D) seigniorage
A policy maker who is concerned that the unemployment rate is too high would ________.
A. use tariffs to reduce imports and increase net exports B. increase the minimum wage C. decrease government spending D. increase taxes