How does price serve as a rationing mechanism in a market economy? Explain.
What will be an ideal response?
ANS:
Because most goods and services are relatively scarce, they have to be rationed somehow. Those who have the purchasing power and are willing to pay the price can obtain a good or service. Others, who do not think the product is worth the price or do not possess the purchasing power to buy the good, will do without it.
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Which of the following could be a cause of consumption decreasing?
A. Real income increases. B. Interest rates increase. C. Wealth increases. D. Expected future income increases.
The argument of Keynesian macroeconomic policy is that ______________ need(s) to spend when times are hard and save when times are good for the sake of the overall economy.
a. individuals b. the government c. states d. companies
The forgone income that the owner of a business could have made by spending time working in another job is called:
A. total cost. B. explicit cost. C. opportunity cost. D. marginal cost.
All of the following curves are U-shaped, except the:
a. long-run average total cost. b. average total cost. c. average variable cost. d. average fixed cost.