When competition is present and private ownership rights are clearly defined and securely enforced by the legal system, business firms will have a strong incentive to
What will be an ideal response?
innovate and develop better products and lower cost production methods
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In a market system, ____ distributes goods among consumers in accord with their tastes and preferences, using voluntary exchange to determine who gets what.
A. a price system B. a regulatory framework C. a democratic government D. a closed system
The external costs of alcohol consumption are related to, among other things, death and injury related to auto accidents caused by drunk drivers. These costs have been estimated to be about 47 cents per ounce of alcohol consumed. Taxes on alcohol amount to 23 cents per ounce. This suggests that alcohol consumption is (i) greater than the efficient or optimal amount; (ii) should be reduced to zero
to eliminate the externality. a. i and ii b. i not ii c. ii not i d. neither i nor ii
When a tariff is imposed, a deadweight loss occurs because of: a. a loss in producer surplus
b. a fall in the price of the imported good. c. an increase in the supply of the good. d. a loss in total surplus.
In the quantity equation, the total output of the economy Y is used instead of transactions T because:
A. income is harder to measure than transactions. B. transactions are harder to measure than income. C. transactions grow at a faster rate than income. D. transactions grow at a slower rate than income.