What are some of the problems that exist with a laissez-faire economy?
What will be an ideal response?
Free markets may not always produce the goods and services that people want at the lowest cost. They are not always efficient. Also, income may be distributed unequally.
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How do firms in monopolistic competition compete?
What will be an ideal response?
Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on
a. a sharp increase in the demand for gasoline that was brought on by the Vietnam War. b. the government's policy of maintaining a price ceiling on gasoline. c. an indifference among U.S. consumers toward conservation. d. the lack of substitutes for crude oil.
If price is less than average variable cost at a level of output where marginal revenue is equal to marginal cost, then in the short run the firm:
A. should shut down. B. should produce the level of output where marginal revenue equals marginal cost. C. should gather more data to determine whether to shut down. D. will produce only if they can decrease their fixed costs.
The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds
A) lower; greater; greater B) lower; smaller; greater C) greater; greater; greater D) greater; smaller; greater