Which of the following holds true in a market when the invisible hand functions properly?
A. MC = MU = P
B. P = MRS
C. P = MC but not P = MU
D. P = MU but not P = MC
Answer: A
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The above figure shows the market for pizza. The market is in equilibrium when new pizza firms enter the market. What point represents the most likely new price and quantity?
A) A B) B C) C D) D E) E
Tariffs result in a decrease in consumer surplus because: a. the price and the quantity consumed of the protected good increases
b. the price and the quantity consumed of the protected good decreases. c. the price of the protected good increases and quantity consumed decreases. d. the price of the protected good decreases and quantity consumed increases.
In the short run, the impact of a $50 billion spending package on GDP will be
a. greater than $50 billion because of the multiplier effect b. less than $50 billion because of the tax code c. greater than $50 billion because of the tax code d. exactly $50 billion e. greater than $50 billion because of crowding out
When regulating a firm, setting price equal to marginal cost does not necessarily require providing a subsidy if
a. it always requires providing a subsidy b. ATC is always falling c. MC is always falling d. variable costs are covered e. ATC is U-shaped