Sometimes the response to price signals, rather than the signals themselves, may be flawed.
Answer the following statement true (T) or false (F)
True
The market may fail even when the price signals are accurate. The response to price signals, rather than the signals themselves, may be flawed. For example, there may be externalities present.
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The income effect and the substitution effect offset each other at point
A. I.
B. J.
C. K.
D. S.
The income and substitution effects account for:
A. the upward-sloping supply curve. B. the downward-sloping demand curve. C. movements along a given supply curve. D. shifts in the demand curve.
For a firm selling its product in a purely competitive market, the marginal revenue product of labor can be found by:
A. adding marginal product to total product as one more unit of labor is employed. B. adding marginal revenue to total product as one more unit of labor is employed. C. multiplying marginal product by product price. D. dividing marginal product by product price.
If Japanese workers are more productive than French workers then trade between Japan and France
A) can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. B) cannot take place because Japanese goods and services will be less expensive than French goods and services. C) cannot take place until French workers become more productive. D) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.