Which of the following statements about exchange is true?
a. If everyone starts off with the same quantities of each good, it would be impossible to realize gains from trade.
b. Exchange tends to move each good toward those individuals who value the good more highly.
c. Exchange always results in one party being made better off and the other being made worse off.
d. For trade to occur, everyone must start off with the same value of the good that is traded.
B
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Explain why "bad cars drive out the good ones" in the market for used cars
What will be an ideal response?
Economists love auctions because
a. They maximize consumer surplus b. They minimize producer surplus c. They set the price for the item, avoiding costly negotiations d. They open the door to costly negotiations, with room for manipulation
One of the features of the circular flow model is that it shows the: a. interaction between the government and firms in the financial market
b. interaction between employers and employees in the labor market. c. interaction between households and firms in the market for goods and services. d. interaction between large business houses and households in the financial market.
Suppose the Congress and president decreased the maximum annual contributions limits to retirement accounts and at the same time reduced the budget deficit. What would happen to the interest rate?
a. It would decrease. b. It would increase. c. It would stay the same. d. It might do any of the above.