Under a pure price system, the decision of resource allocation is made by
A. those who have the right to vote in government elections.
B. individuals who own the resources.
C. the head of the government.
D. no one.
Answer: B
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Analyze the following statement, and show what would happen in the long run if such advice were followed by the Fed: "The increase in the stock market has increased people's wealth
As a result, their consumption has increased, increasing aggregate demand and output. So the Fed needs to increase the money supply, since with higher income, people's demand for real money balances will be higher."
The OPEC-designed oil price increases caused the cost of producing almost everything in our economy to increase, resulting in
a. demand-pull inflation b. cost-push inflation c. deflation d. depression e. increased leveraged buyouts
Denny buys a rare coin for $200 and sells the coin one year later for $220. Denny's rate of return is:
A. 10 percent. B. 20 percent. C. 91 percent. D. 110 percent.
An oligopoly with a dominant price leader will produce a level of output
A. between that which would prevail under competition and that which a monopolist would choose in the same industry. B. that would prevail under competition. C. between that which would prevail under competition and that which a monopolistic competitor would choose in the same industry. D. equal to what a monopolist would choose in the same industry.