In a market system, how are the price signals established?
A. Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines.
B. Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers.
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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At the time it collapsed in 1991, the Soviet Union possessed all of the factors that promote increases in economic growth except:
A. a large stock of capital. B. abundant natural resources. C. a political and legal environment that promoted economic productivity. D. a highly educated worker force.
In the following situation the tax system is Taxable income $1,000 $3,000 $9,000 $27,000 Taxes $100 $200 $400 $800
a. progressive through all levels of income b. proportional throughout all levels of income c. regressive throughout all levels of income d. based on the benefits-received principle e. there is insufficient information to answer the question
If Jenna buys a CD at a price of $10, she gets a consumer surplus of $20 . This means she
a. does not have enough money to buy the CD b. will not buy the CD since marginal utility is not high enough c. was willing to pay as much as $30 for the CD d. was willing to pay as much as $20 for the CD e. will have $30 left over after she buys the CD
When government increases a fixed tax, consumption schedule
a. shifts downward in a parallel manner. b. shifts upward in a parallel manner. c. becomes horizontal. d. becomes vertical.