Profits and losses are true signals because they
A) convey information about true long-run profits.
B) cannot be misinterpreted by entrepreneurs.
C) convey information about where to place resources and reward people who act on the information.
D) reward people who make profits with even more profits and punish those who make losses with even more losses.
C
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Very few players are drafted into the NFL when they play at Division II or Division III schools whereas more players are drafted in the MLB from these schools. What can explain this?
A) Attending a Division II or Division III school sends a stronger signal of future and present quality in the NFL. B) Attending a Division II or Division III school sends a weaker signal of future and present quality in the MLB. C) A signal of future and present quality is more important in the MLB than in the NFL. D) Attending a particular school is like a screening test for life insurance.
Refer to the above figure. If the marginal cost curve for pollution abatement shifts to the right, everything considered, the
A) degree of air quality or cleanliness will also decrease. B) the degree of air quality or cleanliness will stay unchanged. C) the degree of air quality will improve. D) the marginal cost of pollution abatement has nothing to do with air quality.
Which of the following is an example of a pure public good?
a. a bus b. a mall c. a teddy bear d. an army e. an automobile
In Figure 1.6, if the opportunity cost of producing cars was zero at all levels of production, the production possibilities curve would be best be represented by a
A. Horizontal line. B. 45-degree line starting at the origin. C. Vertical line. D. Circle.