Describe the signaling aspect of the price system regarding the three basic economic questions
What will be an ideal response?
In the price system, prices provide information to individual buyers and sellers about what and how many items should be produced, how production of items should be organized, and who will choose to buy the produced items. Prices basically serve as signals to everyone within the system which resources are relatively scarce and which are relatively abundant.
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When a firm is considering whether to buy a new piece of equipment with retained earnings, the amount of interest that could be earned on that money is an explicit cost and should be treated as such
Indicate whether the statement is true or false
People in a certain group have a 0.3% chance of dying this year
If a person in this group buys a life insurance policy for $3,300 that pays $1,000,000 to her family if she dies this year and $0 otherwise, what is the expected value of a policy to the insurance company? A) $0 B) $300 C) $3,000 D) $3,300
The compensated demand curve holds the consumer's utility fixed as the price changes
Indicate whether the statement is true or false
Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, price exceeds the firm's marginal and average variable costs. It follows that producing one more cupcake will cause this firm's
A. profits to remain unchanged. B. total cost to decrease. C. profits to increase. D. profits to decrease.