Economic profits and losses are TRUE market signals because they
A. convey information about rewards people should anticipate experiencing by shifting resources from one activity to another.
B. convey information to public officials about where to encourage people to invest and what skills people should develop.
C. cause people to move into careers in both undesirable and desirable industries with equal ease.
D. convey information in an asymmetrical fashion.
Answer: A
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Government certification of the weights and measures used in business can be justified because
A) no business operated for profit would have any interest in weighing and measuring accurately. B) people cannot be trusted. C) government officials, unlike private parties selling for profit, have no incentive to cheat. D) it reduces total transaction costs below what they would be if all individual buyers or sellers had to check for themselves.
A severe storm that slows postal delivery will cause
A) a decrease in Federal Reserve float. B) a decrease in Federal Reserve notes outstanding. C) an increase in Federal Reserve float. D) an increase in Federal Reserve notes outstanding.
What is exchanged in the financial sector?
A. Only assets with a money price B. Money only C. Goods and services D. All financial assets
Refer to the above figure. Other things being equal, if price is at P2, then we would expect
A. consumers to reduce their offering price for the good. B. consumers to bid against each other for goods and force the price still higher. C. an excess quantity demanded to occur. D. price to decline until an equilibrium is achieved at P0.