In a market economy, the government's power to coerce can:
A. undermine economic efficiency by increasing private-sector risk.
B. improve economic efficiency by directing all resources to their most valued uses.
C. reduce private-sector risk and increase economic efficiency.
D. cause significant negative externalities.
Answer: C
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What will be an ideal response?
Total profit is maximized where
A. MR = MC. B. marginal profit is zero. C. the slope of the marginal profit curve is zero. D. All of the responses are correct.
The meaning of interdependence in a monopolistically competitive market is
A) that it is difficult for firms to get together to collude. B) that products produced by firms will be good substitutes. C) that firms will not take into account the reaction of rival firms. D) that price rigging commonly occurs.
If the price of inputs falls and the budget deficit rises due to an increase in government spending, then the:
a. Price index rises, and real GDP rises. b. Price index rises, and real GDP falls. c. Price index rises, and the change in real GDP is uncertain. d. Price index falls, and real GDP rises. e. Price index is uncertain, and real GDP rises.