Markets can give a buyer everything a buyer needs to know about a product even though the buyer does not have the training to understand the specific knowledge needed to build or distribute the product. Explain.
What will be an ideal response?
The market price of a good tells the buyer of the good in a market the opportunity cost of purchasing the good. As long as the value of the good is greater than the price of the good, the buyer will make purchases. As a result, as long as the value of a good is higher than the costs of production, society will efficiently produce the good, maximizing social well-being.
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When considering imports and exports, economists include the ________ as a component of the GDP
A) net exports B) total imports C) gross exports D) total exports
If the labor force in an economy is not fully employed, then
a. the economy is operating outside of its production possibilities frontier b. the economy is operating on its production possibilities frontier c. there must have been an increase in technology to compensate for the labor shortage d. the opportunity cost of producing more of one good is negative e. the economy is operating inside its production possibilities frontier
If the Fed wants to reduce banks' reserves, it can
a. buy securities in the open market. b. lower the reserve ratio. c. lower the federal funds rate. d. raise the discount rate.
According to one theory, advertising sends a signal to consumers about the quality of the product being offered. An implication of this theory is that
a. the actual quality of the product is irrelevant. b. the content of the advertisement is irrelevant. c. advertising is not in the best interest of society. d. it is irrational for firms to pay famous people large amounts of money to appear in their advertisements.