What are three basic sources of economic profit? Which ones are most beneficial for society?
What will be an ideal response?
First, profit is a reward for developing new products that consumers want. Second, profit arises from production methods and processes that reduce production costs below those of other competitors. Third, profit can come from monopoly power that might restrict entry into a business or reduce output and increase price. The first sources of profit are economically desirable because they improve allocation efficiency by creating new products that people want. The second source of profit contributes to productive efficiency by introducing lower cost production methods. These two sources benefit society because they improve economic efficiency. The third source of profit, however, is less economically desirable than the other two sources because it leads to increased prices and less output, and may require government intervention into a market.
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Most successful examples of modern economic growth have occurred in a country with
a. a temperate-zone climate. b. a market economy. c. exports of manufactured goods. d. all of the above.
In Figure 16-2 above, if user costs fall, U0 to U1, then area ________ represents the opportunity cost
A) ABE0U0 B) GE1V0V1 C) U0E0GU1 D) E0E1G
Under a marketable permit system, if the government reduces the quantity of permits, the price of each permit will increase
a. True b. False Indicate whether the statement is true or false
Supplementary Security Incomes are provided by the U.S. government to those who:
a. regularly pay a social security tax. b. are below 65 years of age. c. lack the required education to be absorbed in the job market. d. earn less than $4,500 per year. e. are temporarily unemployed.