How does a laissez-faire economy decide which consumer gets each of the goods that has been produced?
The price mechanism solves the distribution problem by assigning the highest prices to the goods in greatest demand and then letting individual consumers pursue their own self-interests. Price acts as a rationing device that apportions the available goods among consumers who are willing to pay the most for them.
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In the labor market, as wages rise, households
A) decrease the quantity of labor supplied. B) increase the quantity of labor supplied. C) decrease the quantity of labor demanded. D) increase the quantity of labor demanded. E) increase the supply of labor.
The figure above shows Clara's demand for CDs. If the price for a CD is $15, then Clara
A) receives no consumer surplus on the 6th CD she buys. B) receives a total of $10 of consumer surplus. C) will buy no CDs. D) receives a total of $40 of consumer surplus.
The fact that 80% of the assets accumulated during a lifetime are bequeathed to heirs in the United States suggests that
A) the appropriate time horizon for consumption theory is the lifetime of the earner. B) the appropriate time horizon for consumption theory is intergenerational. C) the Barro-Ricardo equivalence theorem is correct. D) it is true that higher taxes increase savings.
If Happy Campers, Camping R Us, and Camp with Us are all competing in the camping market and Happy Campers consistently is the first to change prices, Best Beds might be ________.
A) signaling to the other firms to consistently raise their prices B) signaling to the other firms to consistently maintain their prices C) signaling to the other firms to consistently lower their prices D) offering to be the price leader