Why is wage and price flexibility an important assumption of the classical model?
A) Flexible wages and prices guarantee that there will be no scarcity.
B) Flexible wages and prices allow business firms to fool their workers through the money illusion.
C) Flexible wages and prices allow business firms to fool their customers through the money illusion.
D) Flexible wages and prices allow markets to reach equilibrium.
D
You might also like to view...
If you work 4 extra hours, and the slope of the curve showing the relationship between your income and work hours is 8, your income will increase by
A) $2. B) $4. C) $12. D) $32.
In perfect competition, environmental externalities need not distort the allocation of resources providing:
a. transactions costs are zero. b. average costs are constant for all output levels. c. firms install pollution control equipment. d. the government sets realistic pollution standards.
The total cost curve:
A. is always above the variable cost curve. B. is parallel to the variable cost curve. C. is the sum of the variable cost curve and fixed cost curve. D. All of these are true.
If, when a firm doubles all its inputs, its average cost of production increases, then production displays
A) diminishing returns. B) economies of scale. C) diseconomies of scale. D) declining fixed costs.