Adam Smith coined the term "invisible hand" to describe the process by which the actions of independent, self-interested buyers and sellers will:
A. always lead to the most efficient allocation of resources.
B. often lead to increasing inequality.
C. often lead to the most efficient allocation of resources.
D. always lead an economy to ruin.
Answer: C
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Underproduction compared to the efficient amount implies that for the last unit produced
A) marginal social benefit exceeds marginal social cost. B) marginal social benefit equals marginal social cost. C) marginal social cost exceeds marginal social benefit. D) the deadweight loss is zero.
Discuss why saving and investing entails risk. What is the reward for bearing risk? Explain how income taxes affect the returns to risk bearing and its impact on overall risk taking and innovation
What will be an ideal response?
When interest rates in the U.S. increase, we can expect NCO to:
A. decrease, because capital inflow is increasing. B. increase, because capital inflow is increasing. C. decrease, because capital outflow is increasing. D. increase, because capital outflow is increasing.
The Coase theorem applies only in the case of _____
a. merit goods b. common resources c. inferior goods d. private goods