"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?
a. the elasticity of the market demand curve
b. the power of government when decisions are made democratically
c. the guidelines and regulations set for his industry by the government
d. the incentive structure accompanying market prices
D
You might also like to view...
Varying the quantity of output produced and sold at preset prices is called:
A. self-correcting economics. B. Say's law. C. meeting demand. D. spurring inflation.
Suppose ordinarily half your class would get an A and half would get a B, with A students having a 25% chance of getting an A and B students having a 25% of getting an A. It costs $100 to persuade the instructor to raise a B grade to an A. A student is willing to pay $40 to insure she will get her usual grade and $70 to insure she will get a higher grade than usual. a. If all students buy insurance that guarantees them an A, what is the zero profit price for an insurance company that offers A insurance. b. Will grade insurance be sold in equilibrium? c. Who would buy insurance and at what price if the insurance companies could tell what type of student each student is? d. Is either the result in (b) or (c) efficient?
What will be an ideal response?
Figure 5-3
Suppose that the market price rises from $3 to $5. What is the change in market demand?
A. 80 B. 30 C. 50 D. 110
A firm that wishes to maximize profits will continue to purchase capital goods until the
A) nominal rental price of capital = MPK. B) real rental price of capital = MPK. C) nominal rental price of capital = the real rental price of capital. D) nominal rental price of capital = the price level.