The economic system that answers the What, How and For Whom questions using prices determined by the interaction of supply and demand is a:
A. market economy.
B. command economy
C. soviet economy.
D. traditional economy.
Answer: A
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Suppose that the elasticity of demand for a product is 0.5 and quantity demanded increases by 20%. What must the percentage decrease in price have been?
A. 0.5% B. 5% C. 10% D. 40%
The problem of economic scarcity applies
A) only in countries with no markets to meet people's wants. B) only in underdeveloped countries, because there are no productive resources in these nations. C) only to nations with few resources. D) to the economies of all nations, regardless of their levels of development.
Which of the following best describes an assumption economists make about human behavior?
A) They assume that individuals act rationally all the time in all circumstances. B) They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time. C) They assume that people take into account the question of fairness in all decisions they make. D) They assume that individuals act randomly.
An institutional change that is needed in most developing nations is:
A. The will to develop B. Reduced foreign aid C. Birth control D. Land reform