Which of the following is a clear difference between the market system and government?
A) Collective welfare controls government policy; the market system serves the welfare of individuals.
B) Competition regulates the market system, but competition does not constrain the actions of government officials.
C) The market system serves the interests of some; government serves the interests of all.
D) Each of the above statements expresses the difference between the two.
E) None of the above expresses the difference between the two.
E
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What accounts for specialization?
a. People specialize in the activity in which their opportunity costs are at a maximum. b. People specialize in the activity in which their opportunity costs are lowest. c. People do not specialize in any activity. d. People specialize in the activity that pays the highest wage. e. People specialize in the activity that they enjoy the most, no matter what the salary is.
If an increase in the interest rate raises savings, then
a. the substitution effect is greater than the income effect. b. the income effect is greater than the substitution effect. c. the income effect and the substitution effect move in the same direction. d. we are unable to determine the sizes of the income and substitution effects without more information.
Intense competition in a market will generally lead to
What will be an ideal response?
Lars is CEO of a large monopolistic firm. He looks at what is going on with revenues and pricing, and being knowledgeable about running a monopoly, he decides to reduce production. What does this tell us about his firm?
a. Marginal cost is equal to marginal revenue. b. Marginal revenue is exceeding marginal cost. c. Marginal cost is exceeding marginal revenue. d. Marginal revenue is equal to price.