A recent editorial in a local newspaper argues, "Consumers need to know more about products than just their price. They need to know how these prices are determined, who owns the businesses, and the wages of the workers." Is the editorial writer correct? Why or why not?
What is missing from the editorial is a statement about what the consumer's objectives are. If we allow that the consumer's objective is to make an efficient choice (that is, to engage in a trade that creates value), all the consumer needs to know is the market price. The market price will reflect all the factors involved in the production and distribution of a product, without the consumer needing to know any of this specific information. A consumer would "need to know" other information only if it were relevant to some other (noneconomic) objective for example, the consumer wants to patronize only businesses run by fraternity brothers..
You might also like to view...
The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. If a packet of bubble gum sells for $1.00, then Joanne ________ because ________
A) should recommend that the Bubby Gum company should decrease the price of the bubble gum ; it would sell more and bring a larger profit B) is creating a $2.00 per hour profit for the firm; her real wage rate is more than her output per hour C) is creating a $2.00 per hour loss for the firm; her real wage rate is more than her output per hour D) should ask for a raise in pay; then her real wage would be less than her output per hour E) is the last person the Bubby Gump company will employ; an additional hire would produce equal the amount of additional labor to real wage per hour
Explain the three categories of balance of payments transactions
What will be an ideal response?
The law of diminishing marginal utility explains why an individual's demand curve is elastic
a. True b. False
The marginal cost curve intersects the average variable cost curve (AVC)
a. only when the AVC is rising b. at the AVC curve's maximum point c. at the AVC curve's minimum point d. only when the AVC is sloping downward e. when the AVC intersects the fixed cost curve