What condition must be satisfied so that society is producing the efficient mix of output? Why does this condition guarantee efficiency?
What will be an ideal response?
It must be the case that price equals marginal cost for all products. This condition guarantees efficiency because products are produced up to the point where the social value of the marginal unit of the good just equals the cost of the marginal units of resources used to produce it.
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Key determinants of economic profit include ________
A) the revenue from selling goods and services B) the cost incurred in buying capital C) the cost of hiring labor D) all of the above E) none of the above
When the free rider problem is present in a market:
A. what people pay often does not reflect the real value they put on a good. B. the good will likely be over consumed. C. the good is rival in consumption. D. the good is easily excludable.
About how much of the world's GDP is traded internationally? How has this changed over time? Why?
Which of the following is true? If a central bank runs out of reserve assets, then:
a. Actually, it is impossible for a nation to run out of reserve assets because the central bank could always print more money to increase it. b. It cannot intervene in the foreign exchange market to raise the value of the nation's currency. c. It must fix its exchange rate to a strong currency because the central bank can no longer allow the currency to fluctuate. d. The central bank must borrow from its Treasury to increase the nation's reserve assets. e. It cannot intervene in the foreign exchange market to lower the value of the nation's currency.