According to most economists, the development of markets is:
A. both a necessary and a sufficient condition for development.
B. a sufficient condition for development but not a necessary condition.
C. a necessary condition for development but not a sufficient condition.
D. neither a necessary nor a sufficient condition for development.
Answer: C
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Netflix introduced DVD rentals via US Mail whereby customers do not have to leave their home to rent movies. They also introduced the concept of no-late fees. Netflix has enjoyed strong profits over the last few years
However, what does economic theory tell us should happen to these profits in the long run and why?
Suppose prices for new homes have risen and sales of new homes have also risen. We can conclude that
a. the demand for new homes has risen. b. the law of demand has been violated. c. new firms have entered the construction industry. d. construction firms must be facing higher costs.
Economic profits are
A) the same as accounting profits when firms do not own capital equipment. B) always greater than accounting profits. C) equal to accounting profits plus the implicit costs of the firm. D) whatever remains after all opportunity costs have been taken into account.
Suppose that when disposable income increases by $1,000, consumption spending increases by $750. Given this information, we know that the marginal propensity to consume (MPC) is
A. 1.33. B. 4. C. 0.25. D. 0.75.