Under laissez-faire, society’s decisions about how much of every product to produce depend on
A. consumer preferences only.
B. production costs only.
C. consumer preferences and production costs.
D. neither consumer preferences nor production costs.
Answer: C
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Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products ________ the demand for bakers and ________ the equilibrium wage rate paid to bakers
A) increased; raised B) decreased; raised C) increased; lowered D) decreased; lowered
Fresh Flour makes baking flour and sells its flour in 4 pound sacks or bags. The managers of Fresh Flour are considering whether the firm should make or buy the flour sacks. To make the sacks, Fresh Flour needs a $500,000 piece of equipment. Using this equipment, Fresh Flour can make a flour sack for $0.01 and, for simplicity, ignore taxes and assume that the $0.01 cost includes depreciation and
all other costs. Fresh Flour would finance the $500,000 investment using its own funds and, if it purchased the flour sacks from another firm, it would pay $0.19 a flour sack. The life span of the equipment is 10 years and it has no salvage value at the end of the ten years. If the discount rate is 6 percent and the firm needs 400,000 flour sacks a year, what is the present value of the equipment? A) $623,850 B) $459,250 C) $500,962 D) $529,926
Suppose we were analyzing the Turkish lira per euro foreign exchange market. If there is the expectation that the euro will fall in value in the near future. As a result of speculators' actions the:spot
a. Supply of euros in the foreign exchange market falls, and the demand for euros in the foreign exchange market rises, causing an appreciation of the euro. b. Supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing an appreciation of the euro. c. Supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market rises, causing an uncertain change in the value of the euro. d. Supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing a depreciation of the euro. e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
A command-and-control policy:
A. is unlikely to have any impact on the amount of pollution emitted. B. does not affect the production costs of firms. C. usually finds the most efficient pollution abatement technology. D. decreases the incentive for firms to develop efficient abatement technologies.